Martin Company is considering the introduction of a new product. To determine a

Question

Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year Unit product cost Projected annual selling and administrative expenses Estimated investment required by the company Desired return on investment (RO 11,500 50 S 54,000 S 540,000 21% The company uses the absorption costing approach to cost-plus pricing Required 1. Compute the markup required to achieve the desired ROl. (Round your Required ROI answers to the nearest whole percentage (i.e, 0.1234 should be entered as 12). Round your"Markup Percentage" answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34.)) Answer is complete and correct. Required ROI Investment Selling and administrative % 21 540,000 54,000 167,400 Total production cost Unit product cost per unit Unit sales Total sales Markup percentage 50 ) 11,500 575,000 29.11 % 2. Compute the selling price per unit. (Round your intermediate and final answers to 2 decimal places.) Answer is complete but not entirely correct. Unit product cost Markup Selling price per unit s 50.00 14.56 S 64.56

Explanation / Answer

Ans)

Unit product cost = 50

Mark up = 29.11%

Selling price prer unit = 50 X 129.11% = 64.55

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