Question

1. Maize Water is considering introducing a water filtration device for its 20-ounce water bottles. Market research indicates that 1,000,000 units can be sold if the price is no more than $3. If Maize Water decides to produce the filters, it will need to invest $2,000,000 in new production equipment. Maize Water requires a minimum rate of return of 19% on all investments. Determine the target cost per unit for the filter. (Round answer to 2 decimal places, e.g. 10.50.)

Target Cost Per Unit?

2. Gundy Corporation produces area rugs. The following per unit cost information is available: direct materials $20, direct labor $6, variable manufacturing overhead $7, fixed manufacturing overhead $9, variable selling and administrative expenses $2, and fixed selling and administrative expenses $5. Using a 35% markup on total per unit cost, compute the target selling price.

Target Selling Price?

3. Morales Corporation produces microwave ovens. The following per unit cost information is available: direct materials $39, direct labor $30, variable manufacturing overhead $13, fixed manufacturing overhead $46, variable selling and administrative expenses $14, and fixed selling and administrative expenses $28. Its desired ROI per unit is $30.60. Compute its markup percentage using a total-cost approach.

Markup percentage?

Answer 1