Raphael Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 50,000 units of its sole product. Raphael desires a profit equal to a 12% rate of return on invested assets of $1,000,000. $\begin{array}{ll}
\$ 80,000.00 & \text { Fixed factory overhead cost } \
50,000.00 & \text { Fixed selling and administrative costs } \
5.00 & \text { Variable direct materials cost per urit } \
8.50 & \text { Variable direct labor cost per unit } \
2.50 & \text { Variable factory overhead cost per urit } \
1.00 & \text { Variable selling and admiristrative cost per urit }
\end{array}$ Refer to the information provided for Raphael Corporation. The dollar amount of desired profit from the production and sale of the company's product is:
A) $117,600.
B) $250,000.
C) $120,000.
D) $245,000.

Question

Quizplus · Accepted Answer

The desired profit is calculated as 12% of the invested assets, which is $1,000,000. Therefore, the desired profit is $1,000,000 * 12% = $120,000.

Raphael Corporation Uses the Product Cost Concept of Product Pricing