Answer: $4,200,000
Explanation:
GIVEN the following ;
Unit selling price = $50
Unit material cost = $10
Unit labor cost = $15
Manufacturing overhead = $1,000,000
Promotion and advertising cost = $500,000
Investment worth cm= $6,000,000
Return on investment = 10%
Calculate the RLS:
Return on investment (ROI) :
0.1 × $6,000,000 = $500,000
Fixed cost = $1,000,000 + $500,000 = $1,500,000
Contribution margin :
Selling price per unit - variable cost per unit
$(50 - 25) = $25
RLS = [(total fixed cost + ROI) ÷ Contribution margin)] × selling price per unit
$RLS = [$(1,500,000 + 600,000) ÷ $25)] × $50
$RLS = ($2,100,000 ÷ 25) × $50
$RLS = $84,000 × 50
$RLS = $4,200,000
