Investment in Assets | $ 10,00,000 |
Required ROI is 22% of $1000,000 | $ 2,20,000 |
COST per Unit When budgeted volume is 55000 Units | |
Particulars | Amount |
Direct Material | $ 55 |
Direct Labor | $ 29 |
Variable Manufacturing Overhead | $ 23 |
Fixed Manufacturing Overhead (770000/55000) | $ 14 |
Variable Selling and administrative Overhead | $ 16 |
Fixed Selling and administrative Overhead (275000/55000) | $ 5 |
Total Cost per Unit (55000 Units) | $ 142 |
Profit Margin Required to cover per Unit Shall be | $ 4 |
i.e. ROI / Total Units = (220000/55000) | |
Hence Mark up Percentage will be | 2.82% |
Mark up Percentage = Profit Margin / Cost per Unit *100 | |
Target Selling Price shall be | $ 146 |
Total Cost + Profit Margin | |
COST per Unit When budgeted volume is 44000 Units | |
Particulars | Amount |
Direct Material | $ 55 |
Direct Labor | $ 29 |
Variable Manufacturing Overhead | $ 23 |
Fixed Manufacturing Overhead | $ 18 |
Variable Selling and administrative Overhead | $ 16 |
Fixed Selling and administrative Overhead | $ 6 |
Total Cost per Unit (44000 Units) | $ 147 |
Profit Margin Required to cover per Unit Shall be | $ 5 |
i.e. ROI / Total Units = (220000/44000) | |
Hence Mark up Percentage will be | 3.41% |
Mark up Percentage = Profit Margin / Cost per Unit *100 | |
Target Selling Price shall be | $ 152 |
Total Cost + Profit Margin |
NOTE : In both the case ROI will Remain $ 22,000 only because the investment remains same in both the cases i.e. $ 1000,000. |
Sheridan Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 50,000 units. Per Unit Total Direct materials $48 Direct labor $21 Variable manufacturing overhead $17 Fixed manufacturing overhead $750,000 Variable selling and administrative expenses $22 Fixed selling and administrative expenses $350,000 Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 53,000 units Per Unit Total Direct materials $52 Direct labor $22 Variable manufacturing overhead $18 $689,000 Fixed manufacturing overhead Variable selling and administrative expenses $16 Fixed selling and administrative expenses $424,000 Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 45,000 units. Per Unit Total Direct materials $51 Direct labor $27 Variable manufacturing overhead $24 Fixed manufacturing overhead $540,000 Variable selling and administrative expenses $17 Fixed selling and administrative expenses $405,000 Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 48,000 units. Total Per Unit $53 $30 $16 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $720,000 $14 $432,000 Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 45,000 units. Per Total Unit $51 $30 $20 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $495,000 $18 $225,000 Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 50,000 units. Total Per Unit $45 $29 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $750,000 $13 $400,000 Lovell Computer Parts management requests that the...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 50,000 units. Per Unit Total Direct materials $52 Direct labor $22 Variable manufacturing overhead $18 Fixed manufacturing overhead $650,000 Variable selling and administrative expenses $16 Fixed selling and administrative expenses $400,000 Lovell Computer Parts management requests that...
Problem 21-02A Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 50,000 units. Total Per Unit $48 $25 $22 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $700,000 $15 $250,000 Lovell Computer Parts management...
Problem 21-02A Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 48,000 units. Total Per Unit $53 $30 $16 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $720,000 $14 $432,000 Lovell Computer Parts management...
Problem 8-2A (Video) Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 54,000 units. Per Unit Total Direct materials $55 Direct labor $29 Variable manufacturing overhead $25 Fixed manufacturing overhead $648,000 Variable selling and administrative expenses $13 Fixed selling and administrative expenses $378,000 Lovell Computer Parts...