please help Problem 22-2A (Part Level Submission) Lovell Computer Parts Inc. is
ID: 2431659 • Letter: P
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Problem 22-2A (Part Level Submission) 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 47,000 units. Per Unit $ 47 $ 21 $ 18 Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses 611,000 $ 15 235,000 Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products, on this particular product, management also directs that the target price be set to provide a 24 % return on investment (ROI) on invested assets of $1,263,900 Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 24 % on this new component. (Round answers to 2 decimal places, e.g. 10.50 Markup percentage Target selling price Attempts: 0 of 3 used The parts of this question must be completed in order. This part will be available when you complete the part above.Explanation / Answer
Value of Investment = $ 1,263,900
Return on Investments = 24% i.e. 1,263,900*24% = $ 303,336
Calculation of Variable Cost of Product :-
Calculation of Fixed Cost
Total Fixed Cost $846,000
Calculation of Sales Revenue from 47000 units :-
Total Variable Cost @ $101 = 47000*101 = $4,747,000
Total Fixed Cost = $846,000
Return on Investments = $303,336
Total Revenue = $5,896,336
Selling Price per unit = ($5,896,336/47000) = $125.45
Markup Percentage = (125.45/101)*100 = 24.21%
Direct Material $ 47 Direct Labor $ 21 Variable Manufacturing Overhead $ 18 Variable Selling & administrative Overhead $ 15 Total Variable Cost $ 101Related Questions
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