Question
Voice Com, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,070 units of
Voice Com, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,070 units of cell phones are as follows:
Variable costs: | Fixed costs: | |||||||
Direct materials | $89 | per unit | Factory overhead | $198,300 | ||||
Direct labor | 33 | Selling and admin. exp. | 71,800 | |||||
Factory overhead | 27 | |||||||
Selling and admin. exp. | 22 | |||||||
Total variable cost per unit | $171 | per unit |
Voice Com desires a profit equal to a 14% rate of return on invested assets of $598,500.
a. Determine the amount of desired profit from the production and sale of 5,070 units of cell phones. $
b. Determine the product cost per unit for the production of 5,070 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.
Cost: $____per unit
Markup $____per unit
Selling price $_____per unit
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