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Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,600,000 in assets. The costs of
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,600,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: 1 Variable costs per unit: 2 Direct materials $118.00 3 Direct labor 30.00 4 Factory overhead 50.00 5 Selling and administrative expenses 34.00 6 Total variable cost per unit $232.00 7 Fixed costs: 8 Factory overhead 9 Selling and administrative expenses $254,000.00 149,000.00 Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 11% return on invested assets.
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