Question

Sunland Company has gathered the following information concerning one model of shoe: Variable manufacturing costs 30,000...


Sunland Company has gathered the following information concerning one model of shoe:

Variable manufacturing costs 30,000

Variable selling and administrative costs 30,000

Fixed manufacturing costs 160,000

fixed selling and adminitrative costs 120,000

investment 170,000

ROI 30%

planned production and sales 5000 pairs

What is the target selling price per pair of shoes

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Answer #1
Ans. Target selling Price = Target sales / Sales units
  391000 / 5000
78.2
*Calculation:
Target sales = Target Cost + Target Profit
340000 + 51000
391000
*Target cost:
Variable manufacturing cost 30000
Variable selling & administration cost 30000
fixed manufacturing cost 160000
fixed selling & administration cost 120000
Total 340000
*Target Profit = Investment * ROI
170000 * 30%
51000
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