1. 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 5,000 units of cell phones are as follows:

   Variable costs:			Fixed costs:
   Direct materials	$ 71	per unit	Factory overhead	$177,600
   Direct labor	33		Selling and administrative expenses	62,400
   Factory overhead	21
   Selling and administrative expenses	17
   Total variable cost per unit	$142	per unit

   Smart Stream desires a profit equal to a 15% return on invested assets of $557,330.

   a. Determine the total cost and the total cost amount per unit for the production and sale of 5,000 units of cellular phones. Round the cost per unit to two decimal places.

   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 cent. $ per cellular phone

Check My Work

• Previous
• Next