Gillson Industries has just patented a new product called Gleam, an automobile wax for lasting protection against the elements. The company’s controller has developed the following annual information for use in price determination meetings:

Variable production costs ..............$1,110,000

Fixed overhead .................. 540,000

Selling expenses .................. 225,000

General and administrative expenses ......... 350,000

Desired profit .................... 250,000

Cost of assets employed ............... 1,000,000

Annual demand for the product is expected to be 250,000 cans. On average, the company now earns a 10 percent return on assets.

1. Compute the projected unit cost for one can of Gleam.

2. Using gross margin pricing, compute the markup percentage and selling price for one can.

3. Using return on assets pricing, compute the unit price for one can.