(Solved): Gold Ribbon makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Al ...

Gold Ribbon makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Gold Ribbon makes a variety of candies, the cost differences are insignificant, and the cases all sell for the same price. Gold Ribbon has a total capital investment of $$\$12,000,000$$. It expects to produce and sell 750,000 cases of candy next year. Gold Ribbon requires a $$12\%$$ target return on investment. Expected costs for next year are: (Click the icon to view the costs.) Gold Ribbon prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital Read the requirements. Requirement 1. What is the target operating income? (Enter the percentage as a whole number.) Requirement 2. What is the selling price Gold Ribbon needs to charge to earn the target operating income? Calculate the markup percentage on full cost. Begin by calculating the target revenues by working backwards from the target operating income. Variable production costs $$\$3.00$$ per case Variable marketing and distribution costs $$\$2.50$$ per case Fixed production costs $$\$3,585,000$$ Fixed marketing and distribution costs $$\$400,000$$ Other fixed costs $$\$200,000$$ 1. What is the target operating income? 2. What is the selling price Gold Ribbon needs to charge to earn the target operating income? Calculate the markup percentage on full cost 3. Gold Ribbon is considering increasing its selling price to $$\$14$$ per case. Assuming production and sales decrease by $$6\%$$, calculate Gold Ribbon's return on investment. Is increasing the selling price a good idea?