A company's invested capital is $13,000,000 and management has determined that the target rate of return on investment is 10%. Last year, the company produced 131,313 units and this year expects to units sales to be 10% above last year. The cost of the product is estimated to be $13 per unit. What is the target operating income per unit? (Round any intermediary calculations to the nearest unit and your final answer to the nearest cent.)
A) $9.00
B) $9.90
C) $13.00
D) $6.50

Question

Quizplus · Accepted Answer

Target return on investment: 13,000,000 x 10% = $1,300,000
Expected current year sales: 131,313 x (1 + 10%) = 144,444 units
Targeted operating income per unit: $1,300,000 / 144,444 = $9 per unit

A Company's Invested Capital Is $13,000,000 and Management Has Determined