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?

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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