Determine the amount of desired profit

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Question - Brayton Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,000 units of cellular phones are as follows:

Variable Costs:

 

Fixed Costs:

 

Direct materials

$625,000

Factory overhead

$215,000

Direct labor

225,000

Selling & Admin. expenses

75,000

Factory Overhead

200,000

 

 

Selling & admin. Exp.

150,000

 

 

 

$1,200,000

 

 

Brayton desires a profit equal to a 25% rate of return on invested assets of $500,000.

Required:

a) Determine the amount of desired profit.

b) Determine the product cost per unit for the production of 5,000 phones.

c) Determine the total cost markup percentage (e.g. 20%) using the product cost concept.

d) Determine the selling price of each cellular phone.  Round to nearest dollar.

Reference no: EM132071593

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