Crystal Displays Inc. recently began production of a new product, flat panel dis
ID: 2468002 • Letter: C
Question
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows:
Variable costs per unit:
2
Direct materials
$120.00
3
Direct labor
30.00
4
Factory overhead
50.00
5
Selling and administrative expenses
35.00
6
Total
$235.00
7
Fixed costs:
8
Factory overhead
$250,000.00
9
Selling and administrative expenses
150,000.00
Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% rate of return on invested assets.
2. Assuming that the product cost concept is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays.
Points:
1 / 3
3. (Appendix) Assuming that the total cost concept is used, determine (a) the cost amount per unit, (b) the markup percentage (rounded to two decimal places), and (c) the selling price of flat panel displays (rounded to nearest whole dollar).
Points:
0 / 3
4. (Appendix) Assuming that the variable cost concept is used, determine (a) the cost amount per unit, (b) the markup percentage (rounded to two decimal places), and (c) the selling price of flat panel displays (rounded to nearest whole dollar).
please complete table:
Variable costs per unit:
2
Direct materials
$120.00
3
Direct labor
30.00
4
Factory overhead
50.00
5
Selling and administrative expenses
35.00
6
Total
$235.00
7
Fixed costs:
8
Factory overhead
$250,000.00
9
Selling and administrative expenses
150,000.00
Differential Analysis Score: 17/53 Iternative 1) or Accept August 3 Differential Effect Reject Order Accept Order on Income Alternative 1) (Alternative 2) (Alternative 2) 3 Revenues 4 Costs: 5 Variable manufacturing costs 6 Income (Loss), per unit 6 Income (Loss) per unitExplanation / Answer
The total return in dollar amount needed = 1,500,000*15% = $225,000
$ return per unit = 225000/5000 = $45
2) Product cost concept:
Cost amount per unit = $250 (120+30+50+50-fixed FOH per unit)
Mark up percentage = 18% (45/250)
Selling price = $295
3) Total cost concept:
Cost amount per unit $315 (235+50+30)
Mark up percentage = 14.29% (45/315)
Selling price = $360
4) Variable cost concept:
Cost amount per unit = $235
Mark up percentage = 19.15%
Selling price = $280
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