Mantis desires a profit equal to a 30% rate of return on investedassets of $350,

Question

Mantis desires a profit equal to a 30% rate of return on investedassets of $350,000. Mantis Phone Company used the total costconcept of applying the cost-plus approach to product pricing. Thecosts of producing and selling 3,500 units of mobile phones are asfollows:

Variable Costs:
DM                   $130.00 perunit
DL                      50.00
Factory O/H          35.00
Selling and Adm. Exp.     25.00
Total                         $240.00 per unit

Fixed Costs:
FactoryO/H              $175,000
Selling and Adm. Exp.     70,000

Assume that Mantis Phone Company uses the product cost concept ofapplying the cost-plus approach to product pricing.

a. Determine the total manufacturing costs and the cost amount perunit for the production and sale of 3,500 units of mobilephones.

b. Determine the markup percentage (rounded to two decimal places)for mobile phones.

c. Determine the selling price of mobile phones. Round to thenearest dollar.

Explanation / Answer

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