Question

Product pricing using the cost-plus approach methods; differential analysis for accepting additional business digital displays inc. recently began production of a new product, flat panel displays, which required the investment of $6,000,000 in assets. the costs of producing and selling 20,000 units of flat panel displays are estimated as follows: variable costs per unit: line item description amount direct materials $120 direct labor 30 factory overhead 50 selling and administrative expenses 35 total variable cost per unit $235 fixed costs: line item description amount factory overhead $1,000,000 selling and administrative expenses 400,000 digital displays inc. is currently considering establishing a selling price for flat panel displays. the president of digital displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% return on invested assets. required: question content area note: round all markup percentages to two decimal places, if required. round all costs per unit and selling prices per unit to the nearest whole dollar. 1. determine the amount of desired profit from the production and sale of flat panel displays. fill in the blank 1 of 1$ 2. assuming that the product cost method is used, determine the following: line item description answer a. cost amount per unit $fill in the blank f017f5f8bfb5001_2 b. markup percentage fill in the blank f017f5f8bfb5001_3 % c. selling price per unit $fill in the blank f017f5f8bfb5001_4 3. (appendix) assuming that the total cost method is used, determine the following: line item description answer a. cost amount per unit $fill in the blank f017f5f8bfb5001_5 b. markup percentage fill in the blank f017f5f8bfb5001_6 % c. selling price per unit $fill in the blank f017f5f8bfb5001_7 4. (appendix) assuming that the variable cost method is used, determine the following: line item description answer a. variable cost amount per unit $fill in the blank b. markup percentage fill

Answer 1

The desired profit from the production and sale of flat panel displays can be calculated by multiplying the invested assets by the desired return on investment. Using the cost-plus approach, the cost per unit of the product is calculated by summing up the variable and fixed costs and dividing by the number of units.

Step-by-step explanation:

The desired profit from the production and sale of flat panel displays can be calculated by multiplying the invested assets by the desired return on investment. In this case, the invested assets are $6,000,000 and the desired return on investment is 15%, so the desired profit would be $6,000,000 * 15% = $900,000.

Using the cost-plus approach, the cost per unit of the product can be calculated by summing up the variable costs per unit and the fixed costs, and then dividing it by the number of units. In this case, the variable costs per unit add up to $235, and the total fixed costs are $1,400,000 ($1,000,000 + $400,000). So the total cost per unit would be ($235 + $1,400,000) / 20,000 = $71.75. With the marked up percentage of 15%, the markup on the cost per unit would be 15% * $71.75 = $10.76. Therefore, the selling price per unit would be $71.75 + $10.76 = $82.51.