Question
In: Accounting
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
50,000 units.
| Per Unit | Total | ||||||
| Direct materials | $45 | ||||||
| Direct labor | $29 | ||||||
| Variable manufacturing overhead | $20 | ||||||
| Fixed manufacturing overhead | $750,000 | ||||||
| Variable selling and administrative expenses | $13 | ||||||
| Fixed selling and administrative expenses | $400,000 | ||||||
Lovell Computer Parts management requests that the total cost per
unit be used in cost-plus pricing its products. On this particular
product, management also directs that the target price be set to
provide a 25% return on investment (ROI) on invested assets of
$1,000,000.
1.Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 25% on this new component.
2. Assuming that the volume is 41200 units, compute the markup percentage and target selling price that will allow Lovell computer parts to ear its desired ROI of 25% on this new component.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
50,000 units.
Per Unit
Total
Direct materials
$46
Direct labor
$29
Variable manufacturing overhead
$20
Fixed manufacturing overhead
$600,000
Variable selling and administrative expenses
$18
Fixed selling and administrative expenses
$450,000
Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
50,000 units.
Per
Unit
Total
Direct materials
$52
Direct labor
$22
Variable manufacturing
overhead
$18
Fixed manufacturing overhead
$650,000
Variable selling and administrative
expenses
$16
Fixed selling and administrative
expenses
$400,000
Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
46,000 units.
Per Unit
Total
Direct materials
$46
Direct labor
$22
Variable manufacturing overhead
$21
Fixed manufacturing overhead
$506,000
Variable selling and administrative expenses
$21
Fixed selling and administrative expenses
$322,000
Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
50,000 units.
Per Unit
Total
Direct materials
$55
Direct labor
$28
Variable manufacturing overhead
$20
Fixed manufacturing overhead
$650,000
Variable selling and administrative expenses
$13
Fixed selling and administrative expenses
$300,000
Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
55,000 units.
Per Unit
Total
Direct materials
$54
Direct labor
$22
Variable manufacturing overhead
$23
Fixed manufacturing overhead
$550,000
Variable selling and administrative expenses
$13
Fixed selling and administrative expenses
$275,000
Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
52,000 units.
Per Unit Total Direct materials $45
Direct labor $21
Variable manufacturing overhead $15
Fixed manufacturing overhead $624,000
Variable selling and administrative expenses $17
Fixed selling and administrative expenses $468,000
Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
45,000 units.
Per Unit
Total
Direct materials
$51
Direct labor
$27
Variable manufacturing overhead
$24
Fixed manufacturing overhead
$540,000
Variable selling and administrative expenses
$17
Fixed selling and administrative expenses
$405,000
Lovell Computer Parts management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
50,000 units.
Per
Unit
Total
Direct materials
$ 50
Direct labor
$ 26
Variable manufacturing
overhead
$ 20
Fixed manufacturing
overhead
$ 600,000
Variable selling and
administrative expenses
$ 19
Fixed selling and
administrative expenses
$ 400,000...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
51,000 units. Per Unit Total Direct materials $51 Direct labor $27
Variable manufacturing overhead $24 Fixed manufacturing overhead
$714,000 Variable selling and administrative expenses $19 Fixed
selling and administrative expenses $408,000 Lovell Computer Parts
management requests that...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new...
Lovell Computer Parts Inc. is in the process of setting a
selling price on a new component it has just designed and
developed. The following cost estimates for this new component have
been provided by the accounting department for a budgeted volume of
45,000 units.
Per Unit
Total
Direct materials
$51
Direct labor
$30
Variable manufacturing overhead
$20
Fixed manufacturing overhead
$495,000
Variable selling and administrative expenses
$18
Fixed selling and administrative expenses
$225,000
Lovell Computer Parts management requests that...
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