Quick Stop makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Quick Stop makes a variety of candies, the cost differences are insignificant, and the cases all sell for the same price. Quick Stop has a total capital investment of $16,000,000. It expects to produce and sell 550,000 cases of candy next year. Quick Stop requires a 12% target return on investment. Expected costs for next year are: (Click the icon to view the costs.) Quick Stop prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements. Requirement 2. What is the selling price Quick Stop needs to charge to earn the target operating income? Calculate the markup percentage on full cost. Begin by calculating the target revenues by working backwards from the target operating income. Data Table Target revenues Variable costs Contribution margin Variable production costs $4.50 per case Variable marketing and distribution costs $2.00 per case Fixed costs Fixed production costs $1,405,000 Target operating income Fixed marketing and distribution costs $600,000 Enter any number in the edit fields and then click Check Answer. Other fixed costs $200,000

Quick Stop makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Quick Stop makes a variety of candies, the cost differences are insignificant, and the cases all sell for the same price. Quick Stop has a total capital investment of $16,000,000. It expects to produce and sell 550,000 cases of candy next year. Quick Stop requires a 12% target return on investment. Expected costs for next year are: (Click the icon to view the costs.) Quick Stop prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements. Requirement 2. What is the selling price Quick Stop needs to charge to earn the target operating income? Calculate the markup percentage on full cost. Begin by calculating the target revenues by working backwards from the target operating income. Data Table Target revenues Variable costs Contribution margin Variable production costs $4.50 per case Variable marketing and distribution costs $2.00 per case Fixed costs Fixed production costs $1,405,000 Target operating income Fixed marketing and distribution costs $600,000 Enter any number in the edit fields and then click Check Answer. Other fixed costs $200,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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