Voice Com, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,070 units of cell phones are as follows: Variable costs: Fixed costs: Direct materials $89 per unit Factory overhead $198,300 Direct labor 33 Selling and admin. exp. 71,800 Factory overhead Selling and admin. 27 22 exp. Total variable cost per $171 per unit unit Voice Com desires a profit equal to a 14% rate of return on invested assets of $598,500. a. Determine the amount of desired profit from the production and sale of 5,070 units of cell phones. b. Determine the product cost per unit for the production of 5,070 of cell phones. If required, round your answer to nearest dollar. c. Determine the product cost markup percentage (rounded to two decimal places) for cell phones. d. Determine the selling price of cell phones. Round to the nearest dollar.

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 17E: Product cost method of product costing Smart Stream Inc. uses the product cost method of applying...
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Voice Com, Inc., uses the product cost concept of applying the cost-plus
approach to product pricing. The costs of producing and selling 5,070 units
of cell phones are as follows:
Variable costs:
Fixed costs:
Direct materials
$89 per unit Factory overhead
$198,300
Direct labor
33
Selling and admin.
exp.
71,800
Factory overhead
Selling and admin.
27
22
exp.
Total variable cost per
$171 per unit
unit
Voice Com desires a profit equal to a 14% rate of return on invested assets
of $598,500.
a. Determine the amount of desired profit from the production and sale of
5,070 units of cell phones.
b. Determine the product cost per unit for the production of 5,070 of cell
phones. If required, round your answer to nearest dollar.
c. Determine the product cost markup percentage (rounded to two decimal
places) for cell phones.
d. Determine the selling price of cell phones. Round to the nearest dollar.
Transcribed Image Text:Voice Com, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,070 units of cell phones are as follows: Variable costs: Fixed costs: Direct materials $89 per unit Factory overhead $198,300 Direct labor 33 Selling and admin. exp. 71,800 Factory overhead Selling and admin. 27 22 exp. Total variable cost per $171 per unit unit Voice Com desires a profit equal to a 14% rate of return on invested assets of $598,500. a. Determine the amount of desired profit from the production and sale of 5,070 units of cell phones. b. Determine the product cost per unit for the production of 5,070 of cell phones. If required, round your answer to nearest dollar. c. Determine the product cost markup percentage (rounded to two decimal places) for cell phones. d. Determine the selling price of cell phones. Round to the nearest dollar.
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