Product Cost Method of Product Costing MyPhone, Inc., uses the product cost meth

Question

Product Cost Method of Product Costing MyPhone, Inc., uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,420 units of cell phones are as follows: Variable costs Fixed costs: $198,500 70,900 Direct materials Direct labor Factory overhead Selling and admin. exp $72 per unit Factory overhead 34 26 21 Selling and admin. exp Total variable cost per unit $153 per unit MyPhone desires a profit equal to a 13% rate of return on invested assets of $599,300 a. Determine the amount of desired profit from the production and sale of 5,420 units of cell phones. b. Determine the product cost per unit for the production of 5,420 of cell phones. If required, round your answer to nearest dollar 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 Total Cost Markup Selling price r unit r unit r unit

Explanation / Answer

A Desired Profit: Invested Assets 599300 Rate of Return 13% Desired Profit 77909 B 5420 Particulars PU Total Variable Cost 153 829260 (5420*153) Fixed Overhead 36.62 198500 Fixed S&A Exp 13.08 70900 Total Costs 202.70 1098660 Units 5420 PU Cost 202.70 C Total Cost 10,98,660 Desired Profit 77,909 % Markup 7.09% (77909/1098660) D Total Cost PU 202.70 Mark Up 14.37 (202.70*7.09%) Selling Price 217.08

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