Product Cost Method of Product Costing Voice Com, Inc., uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,090 units of cell phones are as follows:
Variable costs: Fixed costs:
Direct materials $62 per unit Factory overhead $200,500
Direct labor 30 Selling and admin. exp. 71,200
Factory overhead 23
Selling and admin. exp. 19
Total variable cost per unit $134 per unit
Voice Com desires a profit equal to a 14% rate of return on invested assets of $601,100.
a. Determine the amount of desired profit from the production and sale of 5,090 units of cell phones.
$
b. Determine the product cost per unit for the production of 5,090 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 $per unit
Markup per unit
Selling price $per unit