Custom Shoes Co. has gathered the following information concerning one model of shoe: Variable manufacturing costs $40,000 Variable selling and administrative costs $20,000 Fixed manufacturing costs $160,000 Fixed selling and administrative costs $120,000 Investment $1,700,000 ROI 30% Planned production and sales 5,000 pairs Reference: Ref 22-1 What is the desired ROI per pair of shoes? A. $168 B. $68 C. $102 D. $170

Option D = > $170.

Explanation:

From the question above, we are given the following information or data;

''Variable manufacturing costs $40,000 Variable selling and administrative costs $20,000 Fixed manufacturing costs $160,000 Fixed selling and administrative costs $120,000 Investment $1,700,000 ROI 30% Planned production and sales 5,000 pairs"

The gross profit = Investment * Return on Investment = $1,700,000 * 30% = 510000.

$40,000

$20,000

Total Var costs = (Variable manufacturing costs) + (Variable selling and administrative costs).

Total Var costs = $40,000 + $20,000

Total Var costs = $ 60,000.

Therefore, Var cost = 60,000/5000 = $12 pu

Total Fixed cost = (Fixed manufacturing costs) + (Fixed selling and administrative costs).

Total Fixed cost = $160,000 + $120,000 = $280,000.

Target profit = gross profit - Fixed Cost.

= 510,000 + 280,000 = 790,000.

Hence, = 790,000/5000 = $158.

So, 158 + 12 = $170.