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.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 19E
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please read the intructions on the first picture and answer the empty boxes on Problem 25-5A. thanks for your help!
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