Variable costs: 36 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 5,400 units of cell phones are as follows: Fixed costs: Direct materials $60 per unit Factory overhead $198,300 Direct labor Selling and admin. exp. 68,400 Factory overhead Selling and admin. exp. 20 Total variable cost per unit $142 per unit Voice Com desires a profit equal to a 15% rate of return on invested assets of $600,000. a. Determine the amount of desired profit from the production and sale of 5,400 units of cell phones. 96,000 26 b. Determine the product cost per unit for the production of 5,400 of cell phones. If required, round your answer to nearest dollar. 191 X per unit c. Determine the product cost markup percentage (rounded to two decimal places) for cell phones. 9.4 X % d. Determine the selling price of cell phones. Round to the nearest dollar. Total Cost 191 X per unit Markup 18 x per unit 209 x per unit Selling price Feedback Check My Work a. Multiply the desired profit percentage by the desired amount (invested assets). b. Divide the total manufacturing (variable and fixed) costs by the number of units produced. c. Divide the desired profit plus the total selling and administrative expenses by the total manufacturing cost. d. Add cost (b) and markup [(c) * (b)]. Learning Objective 2