Use the following information for questions
Custom Shoes Co. has gathered the following information concerning one model of shoe: $\begin{array}{ll}
\text { Variable manufacturing costs } & \$ 40,000 \
\text { Variable selling and administrative costs } & \$ 20,000 \
\text { Fixed manufacturing costs } & \$ 160,000 \
\text { Fixed selling and administrative costs } & \$ 120,000 \
\text { Investment } & \$ 1,700,000 \
\text { ROl } & 30 \% \
\text { Planned production and sales } & 5,000 \text { pairs }
\end{array}$
-What is the target selling price per pair of shoes?
A) $142
B) $170
C) $114
D) $158

Question

Quizplus · Accepted Answer

The target selling price is calculated by adding the total cost per unit and the desired profit per unit. Total costs include variable and fixed costs. Desired profit is calculated as ROI percentage of the investment divided by the number of units. Total cost per unit = ($40,000 + $20,000 + $160,000 + $120,000) / 5,000 = $68. Desired profit per unit = (30% of $1,700,000) / 5,000 = $102. Target selling price = $68 + $102 = $170.

Use the Following Information for Questions Custom Shoes Co -What Is the Target Selling Price Per Pair of Shoes

Use the Following Information for Questions
Custom Shoes Co -What Is the Target Selling Price Per Pair of Shoes