Question
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,
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 Apples target cost if the company desires a profit of 60% of sales price
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