#6

Product Cost Method of Product Costing

Voice Com, Inc., uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 4,970 units of cell phones are as follows:

Variable costs:						Fixed costs:
	Direct materials		$60	per unit			Factory overhead	$198,500
	Direct labor		37				Selling and admin. exp.	71,000
	Factory overhead		22
	Selling and admin. exp.		21
		Total variable cost per unit	$140	per unit

Voice Com desires a profit equal to a 13% rate of return on invested assets of $600,700.

a. Determine the amount of desired profit from the production and sale of 4,970 units of cell phones. $

b. Determine the product cost per unit for the production of 4,970 of cell phones. If required, round your answer to nearest dollar. $ per unit

c. Determine the product cost markup percentage (rounded to two decimal places) for cell phones. %

d. Determine the selling price of cell phones. Round to the nearest dollar.

Total Cost	$per unit
Markup	per unit
Selling price	$per unit