Davao Company is considering the introduction of a new product. As one dep in its study of the new product, the company has gathered the following data Number of units to be produced and sold each year Unit manufacturing cost Projected annual administrative and selling expenses Estimated investment required by the company 12,500 450 9,000,000 7,500,000 Desired ROI 18% The company uses the absorption approach to cost-plus pricing Required: 1. Compute the markup the company will have to use to achieve the desired ROI 2. Compute the target selling price per unit.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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product
sired or
Exercise II- Set A
increase
Davao Company is considering the introduction of a new product. As one
in its study of the new product, the company has gathered the following data
step
Number of units to be produced and sold each year
Unit manufacturing cost
Projected annual administrative and selling expenses
Estimated investment required by the company
tive of
ners.
12,500
P.
450
9,000,000
e list
ta or
7,500,000
Desired ROI
18%
The company uses the absorption approach to cost-plus pricing
such
ered
Required: 1. Compute the markup the company will have to use to achieve the
desired ROI
2. Compute the target selling price per unit
411
Transcribed Image Text:product sired or Exercise II- Set A increase Davao Company is considering the introduction of a new product. As one in its study of the new product, the company has gathered the following data step Number of units to be produced and sold each year Unit manufacturing cost Projected annual administrative and selling expenses Estimated investment required by the company tive of ners. 12,500 P. 450 9,000,000 e list ta or 7,500,000 Desired ROI 18% The company uses the absorption approach to cost-plus pricing such ered Required: 1. Compute the markup the company will have to use to achieve the desired ROI 2. Compute the target selling price per unit 411
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