Weather Guard Windows Inc. is setting a target price on its newly designed tinted window. Cost data for the window at a budgeted volume of 4,000 units are as follows:

Weather Guard Windows uses cost-plus pricing to provide the company with a 25% ROI on its tinted window line. It has committed a total of $1,016,000 in assets to production of the new tinted window.
Instructions
(a) Calculate the markup percentage under the absorption-cost approach that will allow Weather Guard Windows to realize its desired ROI.
(b) Calculate the target price of the window under the absorption-cost approach, and show proof that the desired ROI is realized.
(c) Calculate the markup percentage under the variable-cost approach that will allow Weather Guard Windows to realize its desired ROI.
(d) Calculate the target price of the window under the variable-cost approach, and show proof that the desired ROI is realized.
(e) Since both the absorption-cost approach and the variable-cost approach produce the same target price and provide the same ROI, why do both methods exist? Isn't one method clearly better than the other?

Per Unit Total Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $100 70 20 120,000 10 102,000