Compute the markup percentage and target selling price

Assignment Help Financial Accounting

Reference no: EM131292229

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 50,000 units.

Per Unit Total

Direct materials $ 45

Direct labor $ 29

Variable manufacturing overhead $ 20

Fixed manufacturing overhead $ 750,000

Variable selling and administrative expenses $ 13

Fixed selling and administrative expenses $ 400,000

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 26 % return on investment (ROI) on invested assets of $ 1,236,600 .

[Collapse question part]

(a) Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 26 % on this new component. (Round answers to 2 decimal places, e.g. 10.50.)

Markup percentage %

Target selling price $

Reference no: EM131292229

Questions Cloud

Deducting the related allowance for doubtful accounts : At the close of its first year of operations, December 31, 2017, Ming Company had accounts receivable of $1,620,000, after deducting the related allowance for doubtful accounts. What should the company report on its balance sheet at December 31, 2017..

Essential features of the allowance method of accounting : Discuss the three (3) essential features of the allowance method of accounting for bad debts. (Hint - (1) How are bad debts estimated (2) How are estimated bad debts recorded in the financial statements - (journal entry) and (3) when and how (journal..

Accounting for the sale of merchandise : Accounting for the sale of merchandise, purchase of merchandise, and accounting for freight and sales tax is important for a Merchandising business. In Merchandising businesses, there is a dual nature to the transactions. In this Discussion, you will..

Present the forecast of cash collections : Initial sales will be $50,000 in January. Sales will increase each month by 1%. 40% of each month's sales will be collected that month in cash; 30% of that month's sales will be collectd in the month following the sale; 20% of that month's sales will..

Compute the markup percentage and target selling price : Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 26 ..

The entry to record this lending transaction includes debit : A company lends its supplier $160,000 for 3 years at a 10% annual interest rate. Interest payments are to be made twice a year. The entry to record this lending transaction includes a debit to:

Different between the uniform commercial code and common law : What is different between the uniform commercial code and common law? Do you think that the owners of a corporation can maximize the object of the firm and satisfy the socially imposed constraints?

Depreciation switching to straight line : Pretend that you have misplaced your MACRS tables. Develop the tables for a property class of 3 years assuming 200% DB depreciation switching to straight line; half-year convention; salvage value equal to $0. Your answers should match those for MACRS..

What is the contribution margin : The following selected data relates to Lazarus Corporation: Assuming 8,000 units are sold, what is the contribution margin?

User Account

All Pages