Compute the target selling price

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Cleanmore Products, Inc. is in the process of setting a selling price on its new top-of-the-line, 3-horsepower, 16-gallon, variable-speed wet/dry shop vacuum. The per unit variable cost estimates for the new shop vacuum are as follows.

 

Per Unit

Direct Materials

$23

Direct Labor

17

Variable manufacturing overhead

12

Fixed manufacturing overhead

8

In addition, Cleanmore has the following fixed costs per unit at a budgeted sales volume of 10,000 units.

Cleanmore has decided to price its new shop vacuum to earn a 20% return on its investment (ROI) of $1,000,000.

Compute the markup percentage to achieve a desired ROI of $20 per unit:

Compute the target selling price

Reference no: EM13535489

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