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Question - The Smart TV Company manufactures televisions. The company is located in Ottawa, Ontario. The company has manufactured a new TV model and is using total cost-plus pricing in determining the selling price. The following financial information is available for this company that will make and sell 1,000 units:
Total Fixed costs $200,000
Total Variable cost per unit $400
Total Investment $5,000,000
Desired ROI 10%
Answer the following:
1) Calculate the ROI per unit, the target selling price per unit, and the mark-up percentage.
2) Explain what happens to the mark up % if total variable costs increase by $100 per unit.
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