90.2K

Verified Solution

Link Copied!

Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 46,000 units. Per Unit Total Direct materials $50 $ 23 Direct labor Variable manufacturing overhead $ 25 Fixed manufacturing overhead $ 598,000 Variable selling and administrative expenses $ 18 Fixed selling and administrative expenses $ 414,000 Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products. On this particular product, management also directs that the target price be set to provide a 23% return on investment (ROI) on invested assets of $ 1,000,000 (a) Your answer is correct. Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 23% on this new component. (Round markup percentage to 2 decimal places, eg. 10.50%.) Markup percentage 3.62 % Target selling price $ 143 e Textbook and Media Attempts: 1 of 3 used (b) * X Your answer is incorrect. Assuming that the volume is 36,800 units, compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 23% on this new component. (Round answers to 2 decimal places, eg. 10.50% or 10.50.) Markup percentage 3.62 % Target selling price $ 143 e Textbook and Media Assistance Used eTextbook Video Save for Later Attempts: 1 of 3 used Submit

Answer & Explanation Solved by verified expert

See Answer