KidzConnect Pte Ltd recently collaborated with a technology company to produce a smart wearable that can be
Question:
KidzConnect Pte Ltd recently collaborated with a technology company to produce a smart wearable that can be clipped onto a baby's clothing to monitor his/her health. The smart wearable can measure a baby's breathing, heartbeat, temperature and sleep pattern.
The company invested $5,800,000 in assets and desires a 58% rate of return on invested assets. The estimated costs of producing and selling 80,000 units of the smart wearable for year 2024 are as follows:
Variable costs per unit:
Direct material $ 68
Direct labour $ 22
Factory overhead $ 31
Selling & administrative expenses $ 14
Total $135
Fixed costs:
Factory overhead $830,500
Selling & administrative expenses $337,500
The company uses the cost-plus approach to establish the selling price.
Required:
Determine the following
Desired profit per unit
Selling price per unit to cover all costs and provide for profit desired by the management
Expert Answer:
