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Variable Cost Concept of Product Pricing
MyPhone Inc. uses the variable cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 3,000
Variable costs:
Fixed costs:
Direct materials
$83 per unit
Factory overhead
$87,000
Direct labor
30
Selling and admin. exp.
30,000
Factory overhead
26
Selling and admin. exp.
21
Total
$160 per unit
MyPhone desires a profit equal to a 25% rate of return on invested assets of $224,640.
a. Determine the total variable costs and the variable cost per unit for the production and sale of 3,000 units of cellular phones.
Total variable costs
$
Variable cost per unit
$
per unit
b. Determine the variable cost markup percentage per unit. Round your percentage answer to one decimal place.
%
c. Determine the selling price per unit. Use the rounded variable cost markup percentage in your calculations, and round the amount of the m
$
per unit