Khalzukhi manufactures and sells a model of motorcycle, XR500. In 2011, it reported the following

 

Units produced and sold 1,500

 Investment $8,400,000

 Markup percentage on full cost 9%

 Rate of return on investment 18%

 Variable cost per unit $8,450  

What was Khalzukhi's operating income on XR500 in 2011? What was the full cost per unit? 

What was the selling price? What was the percentage markup on variable cost? Required 2. Khalzukhi is considering increasing the annual spending on advertising for the XR500 by US$500,000. The company believes that the investment will translate into a 10% increase in unit sales. Should the investment be made? 

Show your calculations. 3. Refer back to the original data. In 2012, Khalzukhi believes that it will only be able to sell 1,400 units at the price calculated in requirement 1. Management has identified US$125,000 in fixed cost that can be eliminated. If Khalzukhi wants to maintain a 9% markup on full cost, what is the target variable cost per unit?

Answer rating: 100% (QA)

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