Gibbs Corporation produces industrial robots for high-precision manufacturing. T

Question

Gibbs Corporation produces industrial robots for high-precision manufacturing. The following information is given for Gibbs Corporation. The company has a desired ROI of 22%. It has invested assets of $54,103,636. It anticipates production of 3,270 units per year. Compute the cost per unit of the fixed manufacturing overhead and the fixed selling and administrative expenses. Fixed manufacturing overhead Fixed selling and administrative expenses Compute the desired ROI per unit. (Round answer to 0 decimal places, e.g. 125.) Compute the target selling price. (Round answer to 0 decimal places, e.g. 125.)

Explanation / Answer

a. Compute the cost per unit of the fixed manufacturing overhead and the fixed selling & administrative expenses

fixed manufacturing overhead =$1,602,300/3,270 = $490

fixed selling & administrative expenses =$559,170/3,270 = $171

Compute the desired ROI per unit.

(54,103,636*22%)/3270 = $3,640

Compute the target selling price

4950780= total costs

Total cost p.u = 4,950,780/3270= $1,514

markup percentage using total cost per unit.

=3640./1514= 240%

Target selling price = 1514*340% = $5,147.60

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