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Compute the projected selling price using the markup

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Reference no: EM13970373

Dexter, Inc., is planning to introduce a new product line. Current plans call for the production and sale of 1,000 units, with estimated production costs as follows:

 

Variable costs:

 

 

Manufacturing

$450,000

 

Selling and administrative

   100,000

 

Total variable costs

 

$   550,000

Fixed costs:

 

 

Manufacturing

$300,000

 

Selling and administrative

   180,000

 

Total fixed costs

 

     480,000

Total costs

 

$1,030,000

The average amount of capital invested in the product line is $900,000 and Dexter's target return on investment is 18%.

a. Compute the markup percentage if the company uses cost-plus pricing based on total cost.  Round to the nearest tenth of a percent (for example, 23.6%). Show calculations.

b. Compute the projected selling price using the markup you computed in part (a). Show calculations.

Reference no: EM13970373

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