Diamond Visual Entertainment Inc. recently began production of a new product, flat panel

displays, which required the investment of $$1,500,000$ in assets. The costs of producing and

selling $5,000$ units of flat panel displays are estimated as follows:

Diamond Visual Entertainment Inc. is currently considering establishing a selling price for flat

panel displays. The president of Diamond Visual Entertainment has decided to use the cost$-$plus

approach to product pricing and has indicated that the displays must earn a $17\%$ return on

invested assets.

a$.$ Determine the amount of desired profit from the production and sale of flat panel

displays.

b$.$ Assuming that the product cost method is used, determine:

i$.$ the cost amount per unit,

ii$.$ the markup percentage, and

iii. the selling price of flat panel displays.

c$.$ Assuming that the total cost method is used, determine:

i$.$ the cost amount per unit,

ii$.$ the markup percentage $($rounded to two decimal places$),$ and

iii. the selling price of flat panel displays. $($Round markup to nearest whole dollar.$)$

d$.$ Assuming that the variable cost method is used, determine:

i$.$ the cost amount per unit,

ii$.$ the markup percentage $($rounded to two decimal places$),$ and

iii. the selling price of flat panel displays. $($Round markup to nearest whole dollar.$)$

e$.$ Comment on any additional considerations that could influence establishing the selling

price for flat panel displays.