Product Cost Method of Product Costing

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

Variable costs per unit:

$\backslash$table$[[$Direct materials,$$150$

Direct labor $25$

Factory overhead $40$

Selling and administrative expenses $25$

Total variable cost per unit $$240$

Fixed costs:

Factory overhead $$350,000$

Selling and administrative expenses $140,000$

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