Question

Concord Corporation 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 $1300000 Units produced and sold 100000 units What is the target selling price per unit? $6.32 $5.75 $7.57 $3.07 Save for Later

Answer 1

Answer:

$7.57

Explanation:

Return on investment (ROI) = Net profit/Investment = 14%

Net profit/$1,300,000 = 14%

Net profit = $1,300,000 × 14% = $182,000

Total costs = Variable costs + Fixed costs = $125,000 + $450,000 = $575,000

Total revenue = Total costs + Net profit = $575,000 + $182,000 = $757,000

Target selling price = Total revenue/Units produced and sold = $757,000/100,000 = $7.57