Total Cost Method of Product Pricing Smart Stream Inc. uses the total cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 6,000 units of cell phones are as follows: Variable costs: Direct materials Direct labor Factory overhead Fixed costs: $ 77 per unit Factory overhead $230,900 35 Selling and administrative expenses 81,100 Selling and administrative expenses Total variable cost per unit 23 19 $154 per unit Smart Stream desires a profit equal to a 15% return on invested assets of $708,640.