Question

Check my work Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The firm calculates the price using a variety of pricing methods and then chooses the final price based on that information and other strategic information. A summary of the key cost information follows. Williams expects to manufacture and sell 54,000 parts in the coming year. While the demand for Williams's part has been growing in the past 2 years, management is not only aware of the cyclical nature of the automobile industry, but also concerned about market share and profits during the industry's current downturn. 0.31 points eBook References Variable manufacturing Variable selling and administrative Facility-level fixed overhead Fixed selling and administrative Batch-level fixed overhead Total investment in product line Expected sales (units) Total Costs $ 4,672,000 847,650 2,337,875 667,495 352,000 22,342,000 54,000 Required: 1. Determine the price for the part using a markup of 45% of full manufacturing cost. 2. Determine the price for the part using a markup of 23% of full life-cycle cost. 3. Determine the price for the part using a desired gross margin percentage to sales of 43%. 4. Determine the price for the part using a desired life-cycle cost margin percentage to sales of 20%. 5. Determine the price for the part using a desired before-tax return on investment of 12%. 6. Determine the total contribution margin and total operating profit for each of the methods in requirements 1 through 5.

Answer 1

As per HOMEWORKLIB POLICY i have solved first 4 parts.

1
Manufacturing Cost
Variable Manufacturing	$4,672,000
Plant Level Fixed Overhead	$2,337,875
Batch Level Fixed Overhead	$352,000
Total Manufacturing Cost	$7,361,875
Add: Mark up @ 45%	$3,312,843.75
Total Price	$10,674,718.75
Quantity to be sold	54,000
Selling Price per unit	$197.68
2
Variable Manufacturing	$4,672,000
Variable Selling & And. Exp.	$847,650
Plant Level Fixed Overhead	$2,337,875
Fixed Selling & And. Exp.	$667,495
Batch Level Fixed Overhead	$352,000
Total Cost	$8,877,020
Add: Mark up @ 23%	$2,041,714.60
Total Price	$10,918,734.60
Quantity to be sold	54,000
Selling Price per unit	$202.20
3
Gross margin percentage to sales of 43%
Total Cost	$4,672,000
Total Price	$847,650
Batch Level Fixed Overhead	$352,000
Total Manufacturing Cost	$5,871,650
Add: Gross margin -43% on Sales	$2,524,809.50
Total Price	$8,396,459.50
Quantity to be sold	54,000
Selling Price per unit	$155.49
4
Variable Manufacturing	$4,672,000
Variable Selling & And. Exp.	$847,650
Plant Level Fixed Overhead	$2,337,875
Fixed Selling & And. Exp.	$667,495
Batch Level Fixed Overhead	$352,000
Total Cost	$8,877,020
Add: Gross margin -20% on Sales	$1,775,404
Total Price	$10,652,424
Quantity to be sold	54000
Selling Price per unit	$197.27