Ally has promised Kat that she will get the same $3 per dozen commission regardless of what price the cookies sell for. This makes Ally’s new costs look like this: Initial investment: $450 Fixed costs: $375 Variable costs: $3 (per dozen) Commission; $3 (per dozen) Ally is curious about what price she needs to charge to get a 60% Return on Investment (ROI) including her variable costs, initial investment and fixed costs. What price will she need to charge for a 60% ROI? For this calculation Ally is assuming sales of 900 dozen (900 units). Pay close attention to the investment and unit cost figures.
Ally has promised Kat that she will get the same $3 per dozen commission regardless of what price the cookies sell for. This makes Ally’s new costs look like this:
Initial investment: $450
Fixed costs: $375
Variable costs: $3 (per dozen)
Commission; $3 (per dozen)
Ally is curious about what price she needs to charge to get a 60%
This was covered in Module 6 and the formula is:
FORMULA: ROI PRICE = UNIT COST + (ROI x INVESTMENT) / UNIT SALES
HINT: Make sure you include all of Ally’s expenses in the right category
Question 19 options:
1)
3.42
2)
3.72
3)
3.90
4)
4.21
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