Maui inc is deciding on the price for a new product the

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Maui Inc. is deciding on the price for a new product. The company uses cost-plus pricing based on target return on investment. The following information is available for the product:

Invested capital $25 million
Target rate of return on investment 20%
Full cost of the product (per unit)
at the output level of 125,000 units $200
Full cost of the product (per unit)
at the output level of 80,000 units $250

A. Compute the prospective selling price, assuming the predicted output level is 125,000 units.
B. Compute markup as a percentage of full cost of the product, assuming the predicted output level is 80,000 units.

Reference no: EM13599064

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