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E8-5 Paige Corporation makes a mechanical

Price: $1.99


Paige Corporation makes a mechanical stuffed alligator that sings the Martian national
anthem. The following information is available for Paige Corporation’s anticipated
annual volume of 500,000 units.


  Per Unit Total
Direct materials  7
Direct labor  9
Variable manufacturing overhead  15
Fixed manufacturing overhead  3,000,000
Variable selling and administrative expenses  14
Fixed selling and administrative expenses  1,500,000

The company has a desired ROI of 25%. It has invested assets of $26,000,000.

Instructions
(a) Compute the total cost per unit.
(b) Compute the desired ROI per unit.
(c) Compute the markup percentage using total cost per unit.
(d) Compute the target selling price.

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