Question

Practice Assignment Gradebook ORION Downloadable eTextbook ssignment CES Question 20 Coronado Industries 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 Investment $2000000 Sales 100000 units 14% What is the target selling price per unit? $8.55 $7.30 $4.05 $5.75 Question Attem: Study 1 Privacy Policy. I 2000-2019 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc.

Answer 1

20	ROI =Net Income / Average operating assets
	Net Income =$2,000,000*14% =$280,000
	Net Income	$2,80,000
	Add:Fixed cost	$4,50,000
	Contribution margin	$7,30,000
	Add:Variable cost	$1,25,000
	Sales	$8,55,000
	Selling price per unit	$8.55
	($855,000/100,000 units)
	So Option A is answer
2	Total Power cost
		Machine Hours	Power cost
	High level of activity	17,600	$30,400
	Low level of activity	8,600	$16,900
	Change	9,000	$13,500
	Variable Power cost per machine hours =$13,500 / 9,000 hours =$1.50 per machine hours
	Fixed cost element =$30,400 - (17,600*$1.50)
	Fixed cost element =$30,400 - $26,400 =$4,000
	Fixed cost element =$16,900 - (8,600*$1.50)
	Fixed cost element =$16,900 - $12,900 =$4,000
		High	Low
	Fixed power cost	$4,000	$4,000
4	Rent per room	$115
	Less:Variable costs:
	Maid services	$31
	Other costs	$61
	Contribution margin per room	$23	per room
	Contribution margin ratio	20%
	Fixed Costs:
	Salaries	$5,500
	Utilities	$1,000
	Depreciation	$1,200
	Maintainance	$1,868
	Total Fixed costs	$9,568
	Breakeven point
	($9,658 / $23)	416	rooms
	Breakeven point in dollars
	($9,658 / 0.20)	$47,840