Product Pricing using the Cost-Plus Approach Concepts; Differential Analysis for Accepting Additional Business

Display Labs Inc. recently began production of a new product, flat panel displays, which required the investment of $1,980,000 in assets. The costs of producing and selling 9,900 units of flat panel displays are estimated as follows:

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Product Pricing using the Cost-Plus Approach Concepts; Differential Analysis for Accepting Additional Business Display Labs Inc. recently began production of a new product, flat panel displays, which required the investment of $1,980,000 in assets. The costs of producing and selling 9,900 units of flat panel displays are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total Fixed costs: Factory overhead Selling and administrative expenses $396,000 $ 99 21 45 39 $204 198,000 Display Labs Inc. is currently considering establishing a selling price for flat panel displays. The president of Display Labs has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 20% rate of return on invested assets Required Note: Round all markup percentages to two decimal places. If required, round all costs per unit and selling prices per unit to the nearest cent. 1. Determine the amount of desired profit from the production and sale of flat panel displays 39800