Bythel Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Bythel desires a profit equal to a 10.8% rate of return on invested assets of $900,000. $\begin{array}{ll}
\$ 72,000 & \text { Fixed factory overhead cost } \
45,000 & \text { Fixed selling and administrative costs } \
4.50 & \text { Variable direct materials cost per unit } \
7.65 & \text { Variable direct labor cost per unit } \
2.25 & \text { Variable factory overhead cost per unit } \
0.90 & \text { Variable selling and administrative cost per unit }
\end{array}$
Refer to the information provided for Bythel Corporation. The dollar amount of desired profit from the production and sale of the company's product is:
A) $97,200.
B) $67,200.
C) $73,500.
D) $96,000.

Question

Bythel Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Bythel desires a profit equal to a 10.8% rate of return on invested assets of $900,000. $\begin{array}{ll}
\$ 72,000 & \text { Fixed factory overhead cost } \
45,000 & \text { Fixed selling and administrative costs } \
4.50 & \text { Variable direct materials cost per unit } \
7.65 & \text { Variable direct labor cost per unit } \
2.25 & \text { Variable factory overhead cost per unit } \
0.90 & \text { Variable selling and administrative cost per unit }
\end{array}$
 Refer to the information provided for Bythel Corporation. The dollar amount of desired profit from the production and sale of the company's product is:
A) $97,200.
B) $67,200.
C) $73,500.
D) $96,000.

Quizplus · Accepted Answer

The desired profit is calculated as 10.8% of the invested assets, which is $900,000. Therefore, the desired profit is $900,000 * 10.8% = $97,200.

Bythel Corporation Uses the Product Cost Concept of Product Pricing