A Pricing Decision Exercise
Not what you're looking for?
Better understanding with attachment (sorry but thank you)
Tree Top Company is in the process of setting a selling price for its newest model stunt kite, thlooper. The controller of Tree Top estimates variable cost per unit for the new model to be as
follows:
Direct materials $15.00
Direct labor $12.00
Variable manufacturing overhead $4.00
Variable selling and administrative expenses $5.00
$36.00
In addition, Tree Top anticipates incurring the following fixed cost per unit at a budgeted sales
volume of 20,000 units:
Total Cost Budget Cost
Cost Volume per unit
Fixed manufacturing overhead $240,000 20,000 $12.00
Fixed selling and administrative expenses $260,000 20,000 $13.00
Fixed cost per unit $25.00
Tree Top uses cost-plus pricing and would like to earn a 12% return on its investment (ROI) of $250,000.
Instructions:
Compute the selling price that would provide Tree Top a 12% ROI.
Solution Template: Unit Price
Variable cost per unit $-
Fixed cost per unit $-
Desired ROI per unit $-
Target Selling price $-
Desired ROI per unit
( * .12% / units = $ . )
Purchase this Solution
Solution Summary
This solution helps complete a pricing decision exercise.
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Operations Management
This quiz tests a student's knowledge about Operations Management
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.