EXERCISE 13. Durian Company recently began production of a new product, X, which required the investment...

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EXERCISE 13. Durian Company recently began production of a new product, X, which required the investment of P1,500,000 in assets. The costs of producing and selling 5,000 units of X are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Distribution and administrative expenses Fixed costs: P120 30 50 35 Factory overhead Distribution and administrative expenses P250,000 150,000 The company is currently considering establishing a selling price for X. The company president has decided to use the cost-plus approach to product pricing and has indicated that X must earn a 15% rate of return on invested assets. REQUIRED: 1. What is the amount of desired profit from the production and sale of X? 2. Assuming that the product cost concept is used, what is X's mark-up percentage? 3. Assuming that the total cost concept is used, what is X's cost amount per unit? 4. Assuming that the variable cost concept is used, what is X's selling price? Round to nearest peso. (Show the mark-up percentage in your computations) EXERCISE 13. Durian Company recently began production of a new product, X, which required the investment of P1,500,000 in assets. The costs of producing and selling 5,000 units of X are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Distribution and administrative expenses Fixed costs: P120 30 50 35 Factory overhead Distribution and administrative expenses P250,000 150,000 The company is currently considering establishing a selling price for X. The company president has decided to use the cost-plus approach to product pricing and has indicated that X must earn a 15% rate of return on invested assets. REQUIRED: 1. What is the amount of desired profit from the production and sale of X? 2. Assuming that the product cost concept is used, what is X's mark-up percentage? 3. Assuming that the total cost concept is used, what is X's cost amount per unit? 4. Assuming that the variable cost concept is used, what is X's selling price? Round to nearest peso. (Show the mark-up percentage in your computations)

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Answer Durian Company Product X Pricing Analysis 1 Desired Profit Invested Assets P1500000 Desired Return on Invested Assets 15 Desired Profit Investe... View the full answer