Question: MyPhone Inc. uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 8,000 units of cellular phones are as follows: Variable costs: Fixed costs:
Direct materials $146 per unit
Factory overhead $400,000
Direct labor 53
Selling and admin. exp. 136,000
Factory overhead 45
Selling and admin. exp. 36
Total $280 per unit
MyPhone desires a profit equal to a 20%
rate of return on invested assets of $1,318,600.
a. Determine the total cost markup percentage (rounded to one decimal place).
b. Determine the selling price per unit. Round to the nearest cent.