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. 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 Cost amount per unit c. Determine the markup percentage for Product E.

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. 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 Cost amount per unit c. Determine the markup percentage for Product E.

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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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

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.
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
Cost amount per unit
c. Determine the markup percentage for Product E.
d. Determine the selling price of Product E. Round your answer to two decimal places.

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