Question

Adler Company is considering developing a new product. The company has gathered the following information on this product. Expected total unit cost $25 Estimated investment for new product $500,000 Desired ROI 10% Expected number of units to be produced and sold 1,000 Given this information the desired markup percentage and selling price is:

Answer 1

markup 200% over cost

selling price 75 dollars

Step-by-step explanation:

investment 500,000

return on investment : 10%

500,000 x 10% = 50,000

units producted: 1,000

markup per unit: 50,000 / 1,000 = 50 dollar

the markup will be: 25 * X = 50

X = 2 = 200%

selling price: 25 + 50 = 75

75