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Exercise M-7 (Part Level Submission)

(a)

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(b)

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Exercise M-7 (Part Level Submission)

Gibbs Corporation produces industrial robots for high-precision manufacturing. The following information is given for Gibbs Corporation.
Per Unit Total Direct materials $420 Direct labor $310 Variable manufacturing overhead $  75 Fixed manufacturing overhead $1,494,600 Variable selling and administrative expenses $  61 Fixed selling and administrative expenses $  578,760
The company has a desired ROI of 18%. It has invested assets of $65,154,667. It anticipates production of 3,180 units per year.

(a)

Your answer is correct. Compute the cost per unit of the fixed manufacturing overhead and the fixed selling and administrative expenses.
Fixed manufacturing overhead $

per unit Fixed selling and administrative expenses $

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(b)

Compute the desired ROI per unit. (Round answer to 0 decimal places, e.g. 125.)
ROI $

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Explanation / Answer

Desired ROI per unit =(65154667*18%)/3180= 3688

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