Voice Com, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The
Question:
Voice Com, Inc., uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,500 units of cellular phones are as follows:
Variable costs: Fixed costs:
Direct materials $65 per unit Factory overhead $198,200
Direct labor 32 Selling and admin. exp. 69,700
Factory overhead 28
Selling and admin. exp. 21
Total $146 per unit
Voice Com desires a profit equal to a 14% rate of return on invested assets of $599,200.
a. Determine the amount of desired profit from the production and sale of 5,500 units of cellular phones.
$
b. Determine the cost amount per unit for the production of 5,500 units of cellular phones. If required, round your answer to nearest dollar.
$ per unit
c. Determine the product cost markup percentage (rounded to two decimal places) for cellular phones.
%
d. Determine the selling price of cellular phones. Round to the nearest dollar.
Cost $ per unit
Markup $ per unit
Selling price $ per unit
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac