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Best Ride Pty Ltd. produces electric scooters. Best Ride scooters are considered the most reliable in the marketplace. The firm is planning to launch a new electric scooter model featured with the new long-lasting battery generation and the lightest weight.

The following data relating to this model are based on production of 70,000 units per year.

	Total
Direct materials	$1,800,000
Direct labor	$2,400,000
Variable manufacturing overhead	$600,000
Fixed manufacturing overhead	$1,800,000
Variable selling and administrative expenses	$360,000
Fixed selling and administrative expenses	$1,440,000

Daniel, the marketing manager uses the cost-plus pricing to set the new models target selling price. For previous scooter models, management usually adds 35% as the markup on total unit cost.

Required:

Compute each of the following for the new product: (Round all calculations to two decimal places.)

a)Total variable cost per unit, total fixed cost per unit, and total cost per unit. (6 marks)

b)Desired ROI per unit. (3 marks)

c)Target selling price. (3 marks

d)Another cost-based approach to pricing is called time and material pricing. Under this approach, two pricing rates are set. Explain where this approach is used and identify the steps involved in time-and-material pricing. Also explain why this approach is used in some industries. (6 marks)

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