Question
Smart Stream Inc. uses the total cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell phones
Smart Stream Inc. uses the total 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: | Fixed costs: | |||||||
Direct materials | $150 | Factory overhead | $350,000 | |||||
Direct labor | 25 | Selling and administrative expenses | 140,000 | |||||
Factory overhead | 40 | |||||||
Selling and administrative expenses | 25 | |||||||
Total variable cost per unit | $240 |
Smart Stream desires a profit equal to a 30% return on invested assets of $1,200,000.
a. Determine the total cost and the total cost amount per unit for the production and sale of 10,000 cellular phones.
Total cost | $ |
Total cost amount per unit | $ |
b. Determine the total cost markup percentage (rounded to two decimal places) for cellular phones. %
c. Determine the selling price of cellular phones. Round to the nearest dollar. $ per cellular phone
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