Description
ABC Company uses the
total cost concept of applying the cost-plus approach to product pricing. The
costs and expenses of producing and selling 38,400 units of Product G are as
follows:
|
Variable costs: |
|
|
Direct materials |
$ 4.70 |
|
Direct labor |
2.50 |
|
Factory overhead |
1.90 |
|
Selling and administrative expenses |
2.60 |
|
Total |
$ 11.70 |
|
Fixed costs: |
|
|
Factory overhead |
$80,000 |
|
Selling and administrative expenses |
14,000 |
ABC desires a profit
equal to a 14% rate of return on invested assets of $640,000.
|
(a) |
Determine the amount of desired profit from |
|
(b) |
Determine the total costs and the cost amount |
|
(c) |
Determine the markup percentage for Product G. |
|
(d) |
Determine the selling price of Product G. |
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