Question

Voice Com, Inc., produces and sells cellular phones. The costs of producing and selling 8,000 units of cellular phones are as follows:

Variable costs:			Fixed costs:
Direct materials	$ 80	per unit	Factory overhead	$383,000
Direct labor	37		Selling and admin. exp.	134,600
Factory overhead	24
Selling and admin. exp.	19
Total	$160	per unit

Voice Com desires a profit equal to a 15% rate of return on invested assets of $560,000.

Assume that Voice Com, Inc., uses the variable cost concept 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 8,000 units of cellular phones.

Total variable costs	$
Variable cost amount per unit	$

b.  Determine the variable cost markup percentage for cellular phones.
 %

c.  Determine the selling price of cellular phones. Round to the nearest cent.
$ per phone