ABC Company uses the total cost concept of applying the cost-plus approach to product pricing

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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
the production and sale of Product G.

(b)

Determine the total costs and the cost amount
per unit for the production and sale of 38,400 units of Product G.

(c)

Determine the markup percentage for Product G.

(d)

Determine the selling price of Product G.

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