AA 10.1 Assume Apple is designing a new smartphone. Each unit of this new phone is expected to require $230 of direct materials, $10 of direct labor, $20 of variable overhead, and $20 of variable selling and administrative costs. Required 1. If Apple uses the variable cost method to set selling prices and plans a markup of 200% of variable costs, what is the expected selling price per unit of this new phone? 2. Assume that Apple is a "price-taker" and the market sales price for this type of phone is $800 per unit. Compute Apple's target cost if the company desires a profit of 60% of sales price. Description In requirement \#1, this Accounting Analysis problem asks us to compute the selling price for a product based upon "markup on cost. "Remember: Selling Price = variable Cost/unit+ (\%markup x variable cost/unit). In requirement \#2 consider using this formula: Selling price = Variable Cost/unit + Fixed Cost + Profit Selling price is given: Variable and Fixed Cost are considered as one cost and Profit is .60(selling price)