Reference no: EM132621645

QMS has invested Rs. 50 million in refurbishing an existing facility to manufacture the new product. One production begins; the company estimates that it will incur fixed costs of Rs. 100 million. The variable cost to produce each device is estimated to be Rs. 12,500 and is expected to remain at that level for the output capacity of the facility. The company expects unit sales of 100,000 units. The company is using cost plus pricing (mark up pricing). QMS wants to earn a 25% markup on sales. QMS would be selling this product to consumers through wholesalers and retailers

Question 1: Calculate

1. Total Cost
2. Per unit cost
3. Markup price, assuming the company uses cost plus pricing
4. ROI price, assuming the company uses target return pricing and wants a 30% return on its investment