Sunland Company has a new product going on the market next year. The following data are...
Sunland Company has a new product going on the market next year. The following data are projections for production and sales: Variable costs $125000 Fixed costs $450000 ROI 14% Investment $1400000 Sales 100000 units What is the target selling price per unit?
Homework Answers
ROI=Net operating income/Value of investment
Net operating income=(1400000*14%)=$196000
Target contribution margin=Fixed cost+Net operating income
=196000+450000=$646000
Contribution margin=Sales-Variable cost
Hence target sales=646000+125000=$771000
Hence target selling price=771000/100000
=$7.71 per unit
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