Question

3. To pomes uach) a. Sales of Granite City Pro months. A market research Products Inc. can be sold of $580 per unit. Grani The annual sales target City Products Inc. wants to Granite City Products Inc. have been on a steady decline for the last 12 arket research study conducted revealed that the product of Granite City can be sold only for $450 as opposed to the current market price charged . Granite City Products Inc. has decided to revise its sales price to $450. us target volume of the product after price revision is 300 units. Granite Inc. wants to earn 30% on its sales amount. What is the target cost per unit? 0. A company's invested capital is $15.000.000 and management has determined that me target rate of return on investment is 10%. Last year, the company produced 120,000 units and this vear expects its unit sales to be 12% above last year. The cost of the product is estimated to be $13 per unit. What is the target operating income per unit? (Round any intermediary calculations to the nearest unit and your final answer to the nearest cent.) What selling price per unit will be required to earn the target operating income?

Answer 1

a. Target profit per unit = $450*30% = $135

Target cost per unit = Sales price per unit - Target profit per unit

= $450 - $135

= $315

b. Target operating income = $15,000,000 * 10% = $1,500,000

Units = 125,000 + (125,000 * 12%) = 140,000

Target operating income per unit = $1,500,000 / 140,000 = $11

Selling price per unit required = Cost of the product per unit + Target operating income per unit

= $13 + $11

= $24