Question
RooPhone Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,000 units of cellular
RooPhone Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,000 units of cellular phones are as follows: (6 points)
Variable costs Fixed Costs:
Direct materials $625,000 Factory overhead $215,000
Direct labor 225,000 Selling & Admin. expenses 75,000
Factory Overhead 200,000
Selling & admin. Exp. 150,000
$1,200,000
RooPhone desires a profit equal to a 25% rate of return on invested assets of $400,000.
a.) Determine the amount of desired profit.
b.) Determine the product cost per unit for the production of 5,000 phones.
c.) Determine the total cost markup percentage (rounded to 2 decimal places) using the product cost concept.
d.) Determine the selling price of each cellular phone. Round to nearest dollar.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started