Question

# Please show work Product Cost Method of Product Costing MyPhone, Inc., uses the product cost method...

Product 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 5,190 units of cell phones are as follows:

 Variable costs: Fixed costs: Direct materials \$64 per unit Factory overhead \$200,900 Direct labor 39 Selling and admin. exp. 70,600 Factory overhead 28 Selling and admin. exp. 18 Total variable cost per unit \$149 per unit

MyPhone desires a profit equal to a 15% rate of return on invested assets of \$598,200.

a. Determine the amount of desired profit from the production and sale of 5,190 units of cell phones.
\$__________

b. Determine the product cost per unit for the production of 5,190 of cell phones. If required, round your answer to nearest dollar.
\$_________ per unit

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

Solution a:

Amount of desired profit from the production and sale of 5,190 units of cell phones = \$598,200* 15% = \$89,730

Solution b:

Product cost per unit for the production of 5,190 of cell phones = Variable production cost + Fixd factory overhead

= (\$64 + \$39 + \$28) + (\$200,900 / 5190) = \$170 per unit

Solution c:

Required mark up per unit to cover selling expense and profit = \$18 + (\$70,600 / 5190) + (\$89,730 / 5190)

= \$48.89 per unit

Product cost markup percentage = \$48.89 / \$170 = 28.76%

Solution d:

Total cost = \$170 per unit

Markup per unit = \$48.89 per unit

Selling price = \$218.89 per unit

#### Earn Coins

Coins can be redeemed for fabulous gifts.