Product Cost Concept of Product Costing

Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows:

Variable costs per unit:						Fixed costs:
	Direct materials		$150				Factory overhead	$350,000
	Direct labor		25				Selling and admin. exp.	140,000
	Factory overhead		40
	Selling and administrative expenses		25
		Total	$240

Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.

a. Determine the amount of desired profit from the production and sale of 10,000 cellular phones. $

b. Determine the cost per unit for the production of 10,000 units of cellular phones. $per unit

c. Determine the product cost markup percentage for cellular phones. %

d. Determine the selling price of cellular phones. Round to the nearest dollar.

Cost	$per unit
Markup	$per unit
Selling price	$per unit