
Concept explainers
(a)
Cost-plus pricing: The pricing approach used by the companies to set the target selling price based on the cost plus desired profit is referred to as cost-plus pricing.
Formula:
Markup percentage: The percentage of
Formula:
Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.
Formula for ROI per unit:
To determine: The markup percentage and target selling price for the new parts of Parts LC
(b)
Cost-plus pricing: The pricing approach used by the companies to set the target selling price based on the cost plus desired profit is referred to as cost-plus pricing.
Formula:
Markup percentage: The percentage of return on investment (ROI) achieved per unit over the total cost of production per unit, is referred to as markup percentage.
Formula:
To determine: The markup percentage and target selling price for the new parts of Parts LC, if the volume is 40,000 units, instead of 50,000 units

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Chapter 8 Solutions
Managerial Accounting: Tools for Business Decision Making
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- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,

