Custom Shoes Co. has gathered the following information concerning one model of shoe: Variable manufacturing costs...
Custom Shoes Co. has gathered the following information concerning one model of shoe:
Variable manufacturing costs $40,000
Variable selling and administrative costs $20,000
Fixed manufacturing costs $160,000
Fixed selling and administrative costs $120,000
Investment $1,200,000
ROI 20%
Planned production and sales 5,000 pairs
What is the target selling price per pair of shoes?
Homework Answers
Therefore, selling price per pair of shoes is $116.
Supporting calculations:
| Variable manufacturing costs | $40,000 |
| Add: Variable selling and administrative costs | $20,000 |
| Add: Fixed manufacturing costs | $160,000 |
| Add: Fixed selling and administrative costs | $120,000 |
| Total Costs | $340,000 |
| Add: Desired Profit ($1,200,000*20/100) | $240,000 |
| Total Sales Revenue | $580,000 |
| Number of Units sold | 5,000 |
| Target selling price per pair of shoes ($580,000/5,000) | $116 |
Custom Shoes Co. has gathered the following information concerning one model of shoe:
Variable manufacturing costs $40,000
Variable selling and administrative costs $20,000
Fixed manufacturing costs $160,000
Fixed selling and administrative costs $120,000
Investment $1,700,000
ROI 30%
Planned production and sales 5,000 pairs
What is the desired ROI per pair of shoes?
a. $68
b. $168
c. $102
d. $170
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