Total Cost Concept of Product Pricing Smart Stream Inc. uses the total 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 per unit: Fixed costs: Direct materials $150 Factory overhead $350,000 Direct labor 25 Selling and admin. exp. 140,000 Factory overhead 40 Selling and administrative expenses 25 Total $240 Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.
a.Determine the total costs and the total cost amount per unit for the production and sale of 10,000 cellular phones.
Total cost $
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
Total Cost Concept of Product Pricing
Smart Stream Inc. uses the total 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 per unit:
Direct materials
$150
Direct labor
25
Factory overhead
40
Selling and administrative expenses
25
Total
$240 Fixed costs:
Factory overhead
$350,000
Selling and admin. exp. 140,000 Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.
a. Determine the total costs and the total cost amount per unit for the production and sale of
10,000 cellular phones.
Total cost
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
