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: Fixed costs:
Direct materials $150 per unit Factory overhead $350,000
Direct labor 25 Selling and admin. exp. 140,000
Factory overhead 40
Selling and admin. exp. 25
Total $240 per unit
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 product cost and the cost amount per unit for the production of 10,000 cellular phones.
c. Determine the product cost markup percentage for cellular phones.
d. Determine the selling price of cellular phones.

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