PR 25-5A Product pricing using the cost-plus approach concepts; differential analysis for accepting additional business Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total $120 30 50 35 $235 Fixed costs: Factory overhead Selling and administrative expenses OBJ. 1, 2 $250,000 150,000 Crystal Displays Inc. is currently considering establishing a selling price for flat panel dis- plays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% rate of return on invested assets. Instructions 1. Determine the amount of desired profit from the production and sale of flat panel displays. 2. Assuming that the product cost concept is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays.

PR 25-5A Product pricing using the cost-plus approach concepts; differential analysis for accepting additional business Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total $120 30 50 35 $235 Fixed costs: Factory overhead Selling and administrative expenses OBJ. 1, 2 $250,000 150,000 Crystal Displays Inc. is currently considering establishing a selling price for flat panel dis- plays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% rate of return on invested assets. Instructions 1. Determine the amount of desired profit from the production and sale of flat panel displays. 2. Assuming that the product cost concept is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays.

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

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

please read the intructions on the first picture and answer the empty boxes on Problem 25-5A. thanks for your help!

PR 25-5A Product pricing using the cost-plus approach concepts;
differential analysis for accepting additional business
Crystal Displays Inc. recently began production of a new product, flat panel displays,
which required the investment of $1,500,000 in assets. The costs of producing and selling
5,000 units of flat panel displays are estimated as follows:
Variable costs per unit:
Direct materials
Direct labor
Factory overhead
Selling and administrative expenses
Total
$120
30
50
35
$235
Fixed costs:
Factory overhead
Selling and administrative expenses
OBJ. 1, 2
$250,000
150,000
Crystal Displays Inc. is currently considering establishing a selling price for flat panel dis-
plays. The president of Crystal Displays has decided to use the cost-plus approach to product
pricing and has indicated that the displays must earn a 15% rate of return on invested assets.
Instructions
1. Determine the amount of desired profit from the production and sale of flat panel displays.
2. Assuming that the product cost concept is used, determine (a) the cost amount per
unit, (b) the markup percentage, and (c) the selling price of flat panel displays.

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