Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 11, Problem 23E
Variable cost method of product pricing
Based on the data presented in Exercise 17, assume that Smart Stream Inc. uses the variable cost method of applying the cost-plus approach to product pricing.
- A. Determine the variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones.
- B. Determine the variable cost markup percentage (rounded to two decimal places) for cellular phones.
- C. Determine the selling price of cellular phones. (Round markup to the nearest dollar.)
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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 5,270 cell phones are as follows:
Variable costs per unit:
Fixed costs:
Direct materials
$71
Factory overhead
$199,500
Direct labor
37
Selling and administrative expenses
70,800
Factory overhead
22
Selling and administrative expenses
22
Total variable cost per unit
$152
Voice Com desires a profit egual to a 15% rate of return on invested assets of $601,600.
a. Determine the amount of desired profit from the production and sale of 5,270 cell phones.
$ 90,240 v
b. Determine the product cost per unit for the production of 5,270 of cell phones. Round your answer to the nearest whole dollar.
168
V per unit
c. Determine the product cost markup percentage for cell phones. Round your answer to two decimal places.
31
х%
Wilderness Products, Incorporated, has designed a self-inflating sleeping pad for use by backpackers and campers. The following
information is available about the new product:
a. An investment of $1,350,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment
needed in the manufacturing process. The company's required rate of return is 24% on all investments.
b. A standard cost card has been prepared for the sleeping pad, as shown below:
Direct materials
Direct labor
Manufacturing overhead (20% variable)
Total standard cost per pad
Standard Quantity
or Hours
4.0 yards
2.4 hours
2.4 hours
Standard Price or Rate
$2.70 per yard
$8.00 per hour
$12.50 per hour
Standard Cost
$10.80
19.20
30.00
$ 60.00
c. The only variable selling and administrative expense will be a sales commission of $9 per pad. The fixed selling and administrative
expenses will be $732,000 per year.
d. Because the company manufactures many products, no more than 38,400 direct…
Refer to the pictur ebelow:
Find:
1. Total Cost of Product A under ABC System2. Total Cost of Product B under ABC System3. Selling Price per unit of Product B assuming profit margin of 20% above cost
Chapter 11 Solutions
Managerial Accounting
Ch. 11 - Explain the meaning of (A) differential revenue,...Ch. 11 - A company could sell a building for 250,000 or...Ch. 11 - A chemical company has a commodity-grade and...Ch. 11 - A company accepts incremental business at a...Ch. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Although the cost-plus approach to product pricing...Ch. 11 - How does the target cost method differ from...Ch. 11 - Prob. 10DQ
Ch. 11 - Lease or sell Plymouth Company owns equipment with...Ch. 11 - Prob. 2BECh. 11 - Make or buy A company manufactures various-sized...Ch. 11 - Replace equipment A machine with a book value of...Ch. 11 - Prob. 5BECh. 11 - Prob. 6BECh. 11 - Prob. 7BECh. 11 - Prob. 8BECh. 11 - Differential analysis for a lease or sell decision...Ch. 11 - Prob. 2ECh. 11 - Differential analysis for a discontinued product A...Ch. 11 - Differential analysis for a discontinued product...Ch. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Make-or-buy decision Somerset Computer Company has...Ch. 11 - Prob. 8ECh. 11 - Machine replacement decision A company is...Ch. 11 - Differential analysis for machine replacement...Ch. 11 - Sell or process further Calgary Lumber Company...Ch. 11 - Sell or process further Dakota Coffee Company...Ch. 11 - Prob. 13ECh. 11 - Accepting business at a special price Box Elder...Ch. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Product cost method of product costing Smart...Ch. 11 - Target costing Toyota Motor Corporation (TM) uses...Ch. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Prob. 21ECh. 11 - Total cost method of product pricing Based on the...Ch. 11 - Variable cost method of product pricing Based on...Ch. 11 - Differential analysis involving opportunity costs...Ch. 11 - Differential analysis for machine replacement...Ch. 11 - Differential analysis for sales promotion proposal...Ch. 11 - Prob. 4PACh. 11 - Product pricing and profit analysis with...Ch. 11 - Product pricing using the cost-plus approach...Ch. 11 - Prob. 1PBCh. 11 - Differential analysis for machine replacement...Ch. 11 - Prob. 3PBCh. 11 - Prob. 4PBCh. 11 - Prob. 5PBCh. 11 - Prob. 6PBCh. 11 - Analyze Pacific Airways Pacific Airways provides...Ch. 11 - Service yield pricing and differential equations...Ch. 11 - Prob. 3MADCh. 11 - Prob. 4MADCh. 11 - Aaron McKinney is a cost accountant for Majik...Ch. 11 - Prob. 3TIFCh. 11 - Decision on accepting additional business A...Ch. 11 - Accepting service business at a special price If...Ch. 11 - Identifying product cost distortion Peachtree...Ch. 11 - Prob. 1CMACh. 11 - Prob. 2CMACh. 11 - Aril Industries is a multiproduct company that...Ch. 11 - Oakes Inc. manufactured 40,000 gallons of Mononate...
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