Product Cost Method of Product Costing Voice Com, Inc., uses the product cost co
ID: 2603964 • Letter: P
Question
Product Cost Method of Product Costing
Voice Com, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 4,700 units of cell phones are as follows:
Voice Com desires a profit equal to a 14% rate of return on invested assets of $599,500.
a. Determine the amount of desired profit from the production and sale of 4,700 units of cell phones.
$ 83930
b. Determine the product cost per unit for the production of 4,700 of cell phones. If required, round your answer to nearest dollar.
$ 173 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.
Variable costs: Fixed costs: Direct materials $74 per unit Factory overhead $200,400 Direct labor 31 Selling and admin. exp. 69,000 Factory overhead 25 Selling and admin. exp. 21 Total variable cost per unit $151 per unitExplanation / Answer
1 the amount of desired profit from the production and sale of 4,700 units of cell phones. DesiredProfit= Cost of ivetsed asset*4% =599500*.14 =$83930 Desired Profit p.u = $83930/4700 17.86 2 Total Cost Total VariableCost p.u 151.00 FxedCost p.u 14.68 (200400+69000)/4700uniits 165.68 Cost per unit = $166 p.u 3 Determine the product cost markup percentage (rounded to two decimal places) for cell phones $ p.u Cost per unit = $166 Desired Profit = $17.86 Mark up on Cost = Profit/Cost 10.76% (17.86/166*100) 4 Determine the selling price of cell phones. Cost per unit = $166 Desired Profit = $17.86 Estimated Selling Price $183.86
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