Question

Target ROI is 19% Invested Capital is $527956 Full Cost per unit $1446 Expected sales volume is 748 units. If the company prices each unit to earn the target ROI, what amount of profit would be added to the cost of each unit? Round your answer to the nearest whole dollar . Don't use dollar signs or commas when entering your answer.

Answer 1

Answer:

The amount of profit that would be added to the cost of each unit is $134.

Explanation:

For taking out the amount of profit to be added , we will use formula -

   PROFIT / EXPECTED SALES PER UNIT

In the question we have been given sales per unit ( 748 ) but profit is not given, so to calculate profit we will do -

  INVESTED CAPITAL X ROI

= $527956 X 19%

= $100311.64

=$100312 (APPROXIMATELY)

Now we will put the value of profit and sales unit in the formula -

   PROFIT / EXPECTED SALES PER UNIT

= $100312 / 748

= $134.106

= $134 (APPROXIMATELY)