FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
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Transcribed Image Text:Product Cost Method of Product Costing
Voice Com, Inc., uses the product cost method of applying the cost-plus approach to product
pricing. The costs of producing and selling 5,310 units of cell phones are as follows:
Variable costs:
Fixed costs:
Direct materials
$67 per unit
Factory overhead
$198,000
Direct labor
37
Selling and admin. exp.
71,400
Factory overhead
22
Selling and admin. exp.
18
Total variable cost per unit
$144 per unit
Voice Com desires a profit equal to a 16% rate of return on invested assets of $601,800.
a. Determine the amount of desired profit from the production and sale of 5,310 units of cell
phones.
2$
b. Determine the product cost per unit for the production of 5,310 of cell phones. If required,
round your answer to nearest dollar.
per unit
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.
Total Cost
per unit
Markup
per unit
Selling price
$4
per unit
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