Jacob Machine Technology Ltd. makes a tool for sharpening the blades of pruning shears and glass clippers. The company has invested $250000 in developing this sharpener. This tool which is about the size of a piece of chewing gun costs $3 to make. Fixed costs for the sharpener are $10,000. The company expects to sell 100,000 sharpeners this year. Jacob Machine's markup on sales is 30 percent, and it wants to earn a 20 percent ROI. Calculate its markup price, its target‐return price as well as its breakeven volume at both prices. Which price should Jacob Manufacturing use?

Jacob Machine Technology Ltd. makes a tool for sharpening the blades of pruning shears and glass clippers. The company has invested $250000 in developing this sharpener. This tool which is about the size of a piece of chewing gun costs $3 to make. Fixed costs for the sharpener are $10,000. The company expects to sell 100,000 sharpeners this year. Jacob Machine's markup on sales is 30 percent, and it wants to earn a 20 percent ROI. Calculate its markup price, its target‐return price as well as its breakeven volume at both prices. Which price should Jacob Manufacturing use?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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