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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roduct Cost Method of Product Costing

MyPhone, Inc., uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,160 units of cell phones are as follows:

Variable costs:				Fixed costs:
	Direct materials	$90	per unit		Factory overhead	$199,200
	Direct labor	31			Selling and admin. exp.	70,300
	Factory overhead	23
	Selling and admin. exp.	22
		Total variable cost per unit	$166	per unit

MyPhone desires a profit equal to a 13% rate of return on invested assets of $600,800.

a. Determine the amount of desired profit from the production and sale of 5,160 units of cell phones.
$fill in the blank 1

b. Determine the product cost per unit for the production of 5,160 of cell phones. If required, round your answer to nearest dollar.
$fill in the blank 2 per unit

c. Determine the product cost markup percentage (rounded to two decimal places) for cell phones.
fill in the blank 3 %

d. Determine the selling price of cell phones. Round to the nearest dollar.

Total Cost	$fill in the blank 4per unit
Markup	fill in the blank 5per unit
Selling price	$fill in the blank 6per unit

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