Product Cost Method of Product Costing Voice Com, Inc., uses the product cost co
ID: 2603661 • 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.
$
b. Determine the product cost per unit for the production of 4,700 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.
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
a.Determine the amount of desired profit from the production and sale of 4,700 units of cell phones.
Answer: Desired Profit = Investment x Expected rate of return
=$599,500 x 14%=$83,930
b.Determine the product cost per unit for the production of 4,700 of cell phones. If required, round your answer to nearest dollar.
$ per unit
Answer:
Particulars
Amount
Direct materials
$ 74.0
Direct labor
$ 31.0
Factory overhead
$ 25.0
Selling and admin. exp.
$ 21.0
Factory overhead
$200,400/4,700
$ 42.6
Selling and admin. exp.
$69,000/4,700
$ 14.68
Product Cost
$ 208.3
c.Determine the product cost markup percentage (rounded to two decimal places) for cell phones.
Profit per Unit =$83,930/4,700 units=$17.86
Mark up percentage =$17.86/$208.33 x 100=8.57%
d. Determine the selling price of cell phones. Round to the nearest dollar.
Cost
$ 208.33
Per Unit
Markup
$ 17.86
Per Unit
Selling price
$ 226.19
Per Unit
Particulars
Amount
Direct materials
$ 74.0
Direct labor
$ 31.0
Factory overhead
$ 25.0
Selling and admin. exp.
$ 21.0
Factory overhead
$200,400/4,700
$ 42.6
Selling and admin. exp.
$69,000/4,700
$ 14.68
Product Cost
$ 208.3
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.