The Board Manufacturing Company reported investment capital of $80,000,000 and a 16% (pretax) target rate of return on the investment of 150,000 units of Product Y

Required:
Compute the targeted annual operating income and the target operating income per unit of Product Y.
A) $5 operating income; $85.33 operating income per unit
B) $12,000,000 operating income; $85.33 operating income per unit
C) $12,500,000 operating income; $85.33 operating income per unit
D) $12,800,000 operating income; $85.33 operating income per unit
E) $12,850,000 operating income; $85.33 operating income per unit

D
Explanation: D) Targeted annual operating income: [(.16 × $80,000,000 )] = $12,800,000
Targeted operating income per unit of Product Y: [($12,800,000 / 150,000 )] = $85.33