Product Cost Method of Product Costing MyPhone, Inc., uses the product cost method of applying the...

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Product Cost Method of Product Costing MyPhone, Inc., uses the product cost method of applying the cost-plus approach to prod

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Answer 1

Answer #1

a.
Desired profit = Invested assets * Rate of return = 601200 * 15%	90180

b.

Direct materials ( 86 * 4620 )	397320
Direct labor ( 30 * 4620 )	138600
Variable factory overhead ( 27 * 4620 )	124740
Fixed factory overhead	199900
Total product cost	860560
(/) Number of units	4620
Product cost per unit	186	per unit

c.

Variable selling and admin exp ( 21 * 4620 )	97020
Fixed selling and admin exp	69500
Total selling and admin exp	166520


Product cost markup percentage = ( Total selling and admin exp + Desired profit ) / Total product cost = ( 166520 + 90180 ) / 860560	29.83%

d.

Total cost	186	per unit
Markup ( 186 * 29.83% )	55	per unit
Selling price	241	per unit

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