Peachtree Doors, Inc. is in the process of setting a target price on its newly designed patio door. Cost data relating to the door at a budgeted volume of 5,000 units is as follows: 
Peachtree uses cost-plus pricing that provides it with a 25% ROI on its patio door line. A total of $4,000,000 in assets is committed to production of the new door.
Instructions
1. Compute each of the following under the absorption-cost approach:
a. Markup percentage needed to provide desired ROI.
b. Target price of the patio door.
2. Compute each of the following under the variable-cost approach:
a. Markup percentage needed to provide desired ROI.
b. Target price of the patio door.
Definitions:
Representativeness Heuristic
A cognitive shortcut that involves making judgments based on how much one event resembles another event, often leading to bias in decision-making.
Occupation
A person's job or profession, often defining a large part of their identity and socioeconomic status.
Survey Data
Information collected from a sample of individuals through their responses to questions, used in research to infer about a larger population.
Whorf
Refers to Benjamin Lee Whorf, an American linguist known for his hypotheses about the relation between language, thought, and cultural perception.
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