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 5,100 units of cell phones are as follows:

Variable costs:						Fixed costs:
	Direct materials		$65	per unit			Factory overhead	$198,200
	Direct labor		36				Selling and admin. exp.	68,900
	Factory overhead		28
	Selling and admin. exp.		22
		Total variable cost per unit	$151	per unit

Voice Com desires a profit equal to a 15% rate of return on invested assets of $602,000.

a. Determine the amount of desired profit from the production and sale of 5,100 units of cell phones. $

b. Determine the product cost per unit for the production of 5,100 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