Reference no: EM132542592

Xech Pty Ltd manufactures various lines of computer equipment. They are planning to introduce a line of laptop computers in July 2020. Current plans call for the production and sale of 1000 computers with estimated production costs as follows: Variable costs: Manufacturing $ 450 000 Selling and administrative $ 100 000 Total variable costs $ 550 000 Fixed costs: Manufacturing $ 300 000 Selling and administrative $ 180 000 Total fixed costs $ 480 000 Total costs: $ 1 030 000 The average amount of capital invested in the laptop computer line is $900000 and Xech's target return on investment for the line is 18%. Calculate the price must Xech charge if the company uses cost-plus pricing based on variable manufacturing cost.

Question 1: Calculate the price must Xech charge if the company uses cost-plus pricing based on absorption manufacturing cost.

Question 2: Calculate the price must Xech charge if the company uses cost-plus pricing based on total variable cost.