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 disp which required the investment of $1,500,000 in assets. The costs of producing and se 5,000 units of flat panel displays are estimated as follows: OBJ Wariable costs per unit: Fixed costs: Factory overhead Selling and administrative expenses Direct materials $120 $250, Direct labor 30 150, Factory overhead Selling and administrative expenses 50 35 Total $235

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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PR 25-5A Product pricing using the cost-plus approach concepts;
differential analysis for accepting additional business
OBJ. 1, 2
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:
Fixed costs:
Factory overhead
Selling and administrative expenses
Direct materials
$120
$250,000
Direct labor
30
150,000
Factory overhead
50
Selling and administrative expenses
35
Total
$235
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.
Warren, C. S., Jonick, C. A., & Schneider, J. S., (2021). Accounting (28 ed.). Boston, MA: Cengage.
Transcribed Image Text:PR 25-5A Product pricing using the cost-plus approach concepts; differential analysis for accepting additional business OBJ. 1, 2 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: Fixed costs: Factory overhead Selling and administrative expenses Direct materials $120 $250,000 Direct labor 30 150,000 Factory overhead 50 Selling and administrative expenses 35 Total $235 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. Warren, C. S., Jonick, C. A., & Schneider, J. S., (2021). Accounting (28 ed.). Boston, MA: Cengage.
Question 1
Answer:
Question 2
a
Total Manufacturing Costs:
Variable
Fixed Factory Overhead
Total
Cost Per Unit
b
Markup Percentage
%
Seling Price
Transcribed Image Text:Question 1 Answer: Question 2 a Total Manufacturing Costs: Variable Fixed Factory Overhead Total Cost Per Unit b Markup Percentage % Seling Price
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