Hill Metal Company is considering to set the selling price of a product that has...
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Accounting
Hill Metal Company is considering to set the selling price of a product that has just undergone some design specifications. The accounting department has provided cost estimates for the redesigned product as shown below:
Per unit Total
Direct materials $12
Direct labor 8
Variable manufacturing overhead 6
Fixed manufacturing overhead $140,000
Variable selling and administrative expenses 4
Fixed selling and administrative expenses $120,000
Additional information:
Number of units produced and sold each year 20,000
Desired return on investment (ROI) 20%
Estimated investment required $200,000
Required:
a. Compute the unit product cost
b. Compute the markup required to achieve the desired ROI
c. Compute the target selling price per unit
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