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 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 amount of desired profit from the production and sale of 10,000 cellular phones.
$
b. Determine the cost per unit for the production of 10,000 units of cellular phones.
$per unit
c. Determine the product cost markup percentage for cellular phones.
%
d. Determine the selling price of cellular phones. Round to the nearest dollar.
Cost $per unit
Markup $per unit
Selling price $per unit
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