Price Setting: Multiple Products

Tech Com$$s predicted variable and fixed costs for next year are as follows:

Variable Costs Fixed Costs

Manufacturing $$364,500$ $$381,780$

Selling and administrative $91,800534,600$

Total $$456,300$ $$916,380$

Tech Com is a small company producing a wide variety of computer interface devices. Per$-$unit manufacturing cost information about one of these products, a high$-$capacity flash drive, is as follows:

Direct materials $$8$

Direct labor $4$

Manufacturing overhead:

Variable $3$

Fixed $6$

Total manufacturing costs $$21$

Variable selling and administrative costs for the flash drive are $$4$ per unit. Management has set a target profit for next year of $$240,000$ on the sale of the flash drive.

Required

a$.$ Determine the markup percentage on variable costs required to earn the desired profit.

Note: Round your answer to the nearest whole percentage point.

Answer $1$

$253$

$\%$

b$.$ Use variable cost markup to determine a suggested selling price for the flash drive. $Answer $2$

$67\mathrm{.}07$

c$.$ For the flash drive, break the markup on variable costs into separate parts for fixed costs and profit.

Note: Round each of your answers below to two decimal places $($for example, enter $2\mathrm{.}34$ for $2\mathrm{.}3555).$

Markup to cover fixed costs $Answer $3$

$38\mathrm{.}09$

Markup to provide for a profit $Answer $4$

$9\mathrm{.}98$

d$.$ Determine the markup percentage on manufacturing costs required to earn the desired profit.

Note: Round your answer to the nearest whole percentage point.

Answer $5$

$116$

$\%$

e$.$ Use the manufacturing costs markup to determine a suggested selling price for the flash drive.

Note: Use the rounded percentage from part $($d$)$ in your calculation.

$Answer $6$

$45\mathrm{.}36$