Jarvis Company uses the total cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 35,000 units of Product E are as follows:Variable costs:Direct materials$3.00Direct labor1.25Factory overhead0.75Selling and administrative expenses3.00Total$8.00Fixed costs:Factory overhead$50,000Selling and administrative expenses20,000Jarvis desires a profit equal to a 14% rate of return on invested assets of $450,000.a. Determine the amount of desired profit from the production and sale of Product E.$ 63,000b. Determine the total costs and the cost amount per unit for the production and sale of 35,000 units of Product E.Total manufacturing costs350,000 VCost amount per unit10c. Determine the markup percentage for Product E.18 V %d. Determine the selling price of Product E. Round your answer to two decimal places.

Selling Price: The selling price is the price at which the goods are sold. It is calculated on the…

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d. Determine the selling price of Product E. Round your answer to two decimal places.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Jarvis Company uses the total cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 35,000 units of Product E are as follows:
Variable costs:
Direct materials
$3.00
Direct labor
1.25
Factory overhead
0.75
Selling and administrative expenses
3.00
Total
$8.00
Fixed costs:
Factory overhead
$50,000
Selling and administrative expenses
20,000
Jarvis desires a profit equal to a 14% rate of return on invested assets of $450,000.
a. Determine the amount of desired profit from the production and sale of Product E.
$ 63,000
b. Determine the total costs and the cost amount per unit for the production and sale of 35,000 units of Product E.
Total manufacturing costs
350,000 V
Cost amount per unit
10
c. Determine the markup percentage for Product E.
18 V %
d. Determine the selling price of Product E. Round your answer to two decimal places.

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