Bythel Corporation uses the product cost concept of product pricing. Below is co

Question

Bythel Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 40,000 units of its sole product. Bythel desires a profit equal to a 7.5% rate of return on invested assets of $800,000.

  Fixed factory overhead cost $52,000

Fixed selling and administrative costs                            $35,000

Variable direct materials cost per unit                               $3.50

Variable direct labor cost per unit $7.25

Variable factory overhead cost per unit                            $2.35

Variable selling and administrative cost per unit $1.00

The dollar amount of desired profit from the production and sale of the company's product is

Explanation / Answer

Answer

Particulars Amount Direct Material per unit 3.50 Direct Labour cost per unit 7.25 Variable Factory overhead cost per unit 2.35 Variable Selling and administrative cost per unit 1.00 Fixed Factory overhead cost per unit(Total fixed cost/ no of units) 1.30 Fixed Selling and administrative cost per unit (Total fixed cost/ no of units)             0.88           16.28

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