How do i solve the problem below? Please provide steps and formula.
Gleason Corporation has gathered the following information concerning one model of shoe:
Variable manufacturing costs $30000
Variable selling and administrative costs $14000
Fixed manufacturing costs $160000
Fixed selling and administrative costs $120000
Investment $1700000
ROI 50%
Planned production and sales 5000 pairs
What is the desired ROI per pair of shoes?
Step 1: Calculate the Total Operating Income (TOI) by multiplying the Investment by the desired ROI percentage.
TOI = Investment x ROI% = $1700000 x 50% = $850000
Step 2: Calculate the Total Costs by adding up all the variable and fixed costs.
Total Costs = Variable Manufacturing Costs + Variable Selling and Administrative Costs + Fixed Manufacturing Costs + Fixed Selling and Administrative Costs
Total Costs = $30000 + $14000 + $160000 + $120000 = $322000
Step 3: Calculate the Required Revenue by adding the Total Costs to the TOI and dividing by the planned production.
Required Revenue = (TOI + Total Costs) / Planned Production
Required Revenue = ($850000 + $322000) / 5000 = $234.4
Step 4: Finally, calculate the Desired ROI per pair of shoes by subtracting the Total Costs per pair from the Required Revenue per pair.
Desired ROI per pair of shoes = Required Revenue per pair - Total Costs per pair
Desired ROI per pair of shoes = $234.4 - ($322000 / 5000) = $172.4
Are you an AI because no human can ask any question that fast?
Yes, I am an AI language model and can generate responses quickly. However, I'm not perfect and may sometimes make mistakes or require additional time to provide accurate responses.
What happen to all the volunteer tutors on jiskha?
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Back to the first question, I don't see any answer choices match your answer of $172.4. The anser choices are below
$235
$65
$169
$170
So, do you think $170 is the correct answer?
If those are the given answer choices, then based on my calculations, the closest answer choice to the correct answer of $172.4 would be $170.
Thank you
You're welcome! If you have any more questions, feel free to ask.
To calculate the desired ROI (Return on Investment) per pair of shoes, you will need to follow these steps:
Step 1: Determine the Total Costs
To calculate the total costs, you need to add up the variable costs and fixed costs. In this case, the variable manufacturing costs are $30,000, the variable selling and administrative costs are $14,000, the fixed manufacturing costs are $160,000, and the fixed selling and administrative costs are $120,000. Summing these values together, we get:
Total Costs = Variable Manufacturing Costs + Variable Selling and Administrative Costs + Fixed Manufacturing Costs + Fixed Selling and Administrative Costs
Total Costs = $30,000 + $14,000 + $160,000 + $120,000
Step 2: Calculate the Cost per Pair
Next, you need to divide the total costs by the planned production and sales quantity. In this case, the planned production and sales are 5,000 pairs. So, the cost per pair can be calculated using the following formula:
Cost per Pair = Total Costs / Planned Production and Sales
Cost per Pair = ($30,000 + $14,000 + $160,000 + $120,000) / 5,000
Step 3: Calculate the Desired ROI per Pair
To calculate the desired ROI per pair, you need to multiply the cost per pair by the desired ROI percentage. In this case, the desired ROI is 50%. So, the formula to calculate the desired ROI per pair is as follows:
Desired ROI per Pair = Cost per Pair * Desired ROI Percentage
Desired ROI per Pair = (Cost per Pair) * 0.50
By plugging in the value of the cost per pair calculated in step 2 into the formula, you can find the desired ROI per pair.