14-22 Cost-plus target return on investment pricing. John Branch is the managing partner of a business that has just finished building a 60-room motel. Branch anticipates that he will rent these rooms for 16,000 nights next year (or 16,000 room-nights). All rooms are similar and will rent for the same price. Branch esti- mates the following operating costs for next year. Variable operating costs Fixed costs Salaries and wages Maintenance of building and pool Other operating and administration costs Total fixed costs $4 per room-night $170,000 48,000 122,000 $340,000 The capital invested in the motel is $1,000,000. The partnership's target return on investment is 20%. Branch expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment. 1. What price should Branch charge for a room-night? What is the markup as a percentage of the full cost of a room-night? 2. Branch's market research indicates that if the price of a room-night determined in requirement 1 is re- duced by 10%, the expected number of room-nights Branch could rent would increase by 10%. Should Branch reduce prices by 10%? Show your calculations.

Average Rate of Return—Cost Savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $140,000 with a $12,000 residual value and a ten-year life. The equipment will replace one employee who has an average wage of $29,460 per year. In addition, the equipment will have operating and energy costs of $6,780 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent.fill in the blank 1 %

Yogesh

Sammamish Brick, Inc., manufactures bricks using clay deposits on the company's property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 2,200 hours per year. Data concerning the company's four main products appear below. Products are sold by the pallet. Gross revenue per pallet Contribution margin per pallet Annual demand (pallets) Hours required in the kiln per pallet Traditional Brick $769 $480 75 10 Textured Facing $1,331 $ 620 Cinder Block $608 $388 85 4 Roman Brick $886 $455 95 10 150 No fixed costs could be avoided by modifying how much is produced of any product. Required: 1a. Calculate the total hours required in the kiln to satisfy demand for all products. Traditional…