Homework Answers
1. Desired profit = 15% rate of return on invested asset
Desired profit = 15% * 1,500,000
Desired profit = $225,000
2.
a
| Particulars | Amount |
| Cost | |
| Direct Material | 120 |
| Direct labor | 30 |
| Factory Overhead | 50 |
| Selling and administrative expenses | 35 |
| Total Variable cost per unit | 235 |
b Markup percentage = (Desired profit/Total Cost)*100
Total variable cost = 5,000 * $235 = $1,175,000
Total Fixed cost = 250,000 + 150,000 = $400,000
Total Cost = $1,575,000
Markup percentage = (225,000/1,575,000)*100
Markup percentage = 14.29%
c) Selling price = Total Cost + Mark up
Selling price = ($1,575,000/5,000) + 14.29% of total cost per unit
Selling price = $315 + 14.29% of $315
Selling price = $315 + $45.01
Selling price = $360.01
3. TOTAL COST CONCEPT
a
| Particulars | Amount |
| Cost | |
| Direct Material | 120 |
| Direct labor | 30 |
| Factory Overhead | 50 |
| Selling and administrative expenses | 35 |
| Total Variable cost per unit (A) | 235 |
| Total Fixed Cost (250,000 +150,000) | 400,000 |
| Fixed cost per unit (400,000/5,000) (B) | 80 |
| Total cost per unit (A) + (B) | 315 |
b Markup percentage = desired profit/total cost
Total variable cost = 5,000 * $235 = $1,175,000
Total Fixed cost = 250,000 + 150,000 = $400,000
Total Cost = $1,575,000
Markup percentage = (225,000/1,575,000)*100
Markup percentage = 14.29%
c) Selling price = Total Cost + Mark up
Selling price = ($1,575,000/5,000) + 14.29% of total cost per unit
Selling price = $315 + 14.29% of $315
Selling price = $315 + $45.01
Selling price = $360.01
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Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: Variable costs per unit: 1 $120.00 Direct materials 30,00 Direct labor Factory overhead 50,00 4 Selling and administrative expenses 35.00 5 $235.00 Total variable cost per unit 7 Fixed costs: Factory overhead $250,000.00 Selling and administrative expenses 150,000.00 9 Crystal Displays Inc. is...
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pendix PR 24-SA Product prici accepting additional business Display Labs Inc. recently began Product pricing using the cost-plus approach concepts; differ awterential abs Inc, recently began production of a new product, flat pan the investment of $1,800,000 in assets. The costs of producing at panel displays are estimated as follows: a panel displays, with kucing, and selling units of flat panel displays Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses $ 90 20 Fixed...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: Variable costs per unit: 1 $120.00 Direct materials 30,00 Direct labor Factory overhead 50,00 4 Selling and administrative expenses 35.00 5 $235.00 Total variable cost per unit 7 Fixed costs: Factory overhead $250,000.00 Selling and administrative expenses 150,000.00 9 Crystal Displays Inc. is...
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