Product Cost Concept of Product Costing MyPhone, Inc., uses the product cost con

Question

Product Cost Concept of Product Costing

MyPhone, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,030 units of cellular phones are as follows:

MyPhone desires a profit equal to a 16% rate of return on invested assets of $601,200.

a. Determine the amount of desired profit from the production and sale of 5,030 units of cellular phones.
$

b. Determine the cost amount per unit for the production of 5,030 units of cellular phones. If required, round your answer to nearest dollar.
$ per unit

c. Determine the product cost markup percentage (rounded to two decimal places) for cellular phones.
%

d. Determine the selling price of cellular phones. Round to the nearest dollar.

Variable costs: Fixed costs: Direct materials $87 per unit Factory overhead $201,800 Direct labor 31 Selling and admin. exp. 68,500 Factory overhead 25 Selling and admin. exp. 21 Total $164 per unit

Explanation / Answer

a Desired Profit = $601,200 x 16% = $96,192 b cost amount (product cost) per unit Variable = $164 x 5,030 = $824,920 Fixed = $201,800 + $68,500 = $270,300 Total = $1,095,220 cost per unit = $218 c Markup percentage = Desired Profit / Total costs = $96,192 / $1,095,220 = 8.78% d cost per unit $218 Mark up ($218 x 8.78%) $19 Selling price $237

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.