ACC 560 MART Start With a Dream /acc560mart.com ACC 560 MART Start With a Dream /acc560mart.com | Page 36

potential market. Because of competition, Eckert does not believe that
it can charge more than $90 for Little Laser. At this price, Eckert
believes it can sell 100,000 of these laser guns. Eckert will require an
investment of $8,000,000 to manufacture, and the company wants an
ROI of 20%.
Instructions
a. Determine the target cost for one Little Laser.
E8-6
Alma's Recording Studio rents studio time to musicians in 2-hour
blocks. Each session includes the use of the studio facilities, a digital
recording of the performance, and a professional music
producer/mixer. Anticipated annual volume is 1,000 sessions. The
company has invested $2,352,000 in the studio and expects a return on
investment (ROI) of 20%. Budgeted costs for the coming year are as
follows.
a. Determine the total cost per session
b. Determine the desired ROI per session
c. Calculate the markup percentage on the total cost per session.
d. Calculate the target price per session.
E8-9
Rey Custom Electronics (RCE) sells and installs complete security,
computer, audio, and video systems for homes. On newly constructed
homes it provides bids using time and material pricing. The following
budgeted cost data are available.