Empire Corporation needs to set a target price for its newly designed product R2D2. The following data

Empire Corporation needs to set a target price for its newly designed product R2–D2. The following data relate to this new product.

These costs are based on a budgeted volume of 100,000 units produced and sold each year. Empire uses cost-plus pricing methods to set its target selling price. The markup on total unit cost is 35%.

Instructions

(a) Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for R2–D2.

(b) Compute the desired ROI per unit for R2–D2.

(c) Compute the target selling price for R2–D2.

(d) Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 80,000 R2–D2s are sold during the year.

Transcribed Image Text:

Per Unit Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $15 $ 7 $2,000,000 $ 6 $1,000,000