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Determine the amount of desired profit from the production

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Reference no: EM132687488

Problem - Product cost concept 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 5,000 units of cellular phones are as follows:

Variable costs:

Fixed costs:

Direct materials

$ 80 per unit

Factory overhead

$200,000

Direct labor

36

Selling and admin. exp.

70,000

Factory overhead

24

 

Selling and admin. exp.

20

 

Total

$160 per unit

 

Voice Com desires a profit equal to a 15% rate of return on invested assets of $600,000.

Required -

a. Determine the amount of desired profit from the production and sale of 5,000 units of cellular phones.

b. Determine the product cost and the cost amount per unit for the production of 5,000 units of cellular phones.

c. Determine the product cost markup percentage (rounded to two decimal places) for cellular phones.

d. Determine the selling price of cellular phones. Round to the nearest dollar.

Reference no: EM132687488

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