Answered: MyPhone, Inc., uses the product cost…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 17E: Product cost method of product costing Smart Stream Inc. uses the product cost method of applying...

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MyPhone, Inc., uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 4,870 units of cell phones are as follows:

Variable costs:				Fixed costs:
	Direct materials	$64	per unit		Factory overhead	$198,100
	Direct labor	32			Selling and admin. exp.	71,000
	Factory overhead	22
	Selling and admin. exp.	19
		Total variable cost per unit	$137	per unit

MyPhone desires a profit equal to a 13% rate of return on invested assets of $601,800.

a. Determine the amount of desired profit from the production and sale of 4,870 units of cell phones.

b. Determine the product cost per unit for the production of 4,870 of cell phones. If required, round your answer to nearest dollar.

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	$per unit

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