Answer Happy

Williams Incorporated produces a single product, a part used in
the manufacture of automobile transmissions. Known for its quality
and performance, the part is sold to luxury auto manufacturers
around the world. Because this is a quality product, Williams has
some flexibility in pricing the part. The firm calculates the price
using a variety of pricing methods and then chooses the final price
based on that information and other strategic information. A
summary of the key cost information follows. Williams expects to
manufacture and sell 55,500 parts in the coming year. While the
demand for Williams’s part has been growing in the past 2 years,
management is not only aware of the cyclical nature of the
automobile industry, but also concerned about market share and
profits during the industry’s current downturn. Total Costs
Variable manufacturing $ 4,669,000 Variable selling and
administrative 844,650 Facility-level fixed overhead 2,334,875
Fixed selling and administrative 664,495 Batch-level fixed overhead
349,000 Total investment in product line 22,339,000 Expected sales
(units) 55,500 Required: 1. Determine the price for the part using
a markup of 39% of full manufacturing cost. 2. Determine the price
for the part using a markup of 20% of full life-cycle cost. 3.
Determine the price for the part using a desired gross margin
percentage to sales of 40%. 4. Determine the price for the part
using a desired life-cycle cost margin percentage to sales of
27%.