Longwood, Inc. manufactures various lines of computer equipment and is planning to introduce a new line of laptops. Current plans call for the production and sale of 1,000 units, with estimated 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 product line is $900,000 and Longwood's target return on investment is 18%. What price must Longwood charge if the company uses cost-plus pricing based on total cost?
A. $900.
B. $1,192.
C. $1,000.
D. $868.
E. None of the answers is correct.
Answer: B
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