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 $4,510$ cell phones are as follows:

Variable costs per unit:

Line Item Description Amount

Direct materials $$70$

Direct labor $38$

Factory overhead $22$

Selling and administrative expenses $18$

Total variable cost per unit $$148$

Fixed costs:

Line Item Description Amount

Factory overhead $$201,000$

Selling and administrative expenses $70,300$

Voice Com desires a profit equal to a $14\%$ return on invested assets of $$600,000.$