Total Cost Method of Product Pricing Smart Stream Inc. uses the total cost method of...
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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 9,000 units of cell phones are as follows:
Variable costs per unit: Fixed costs: Direct materials $ 75 Factory overhead $339,700 Direct labor 35 Selling and administrative expenses 119,300 Factory overhead 23 Selling and administrative expenses 17 Total variable cost per unit $150
Smart Stream desires a profit equal to a 15% return on invested assets of $916,560.
a. Determine the total costs and the total cost amount per unit for the production and sale of 9,000 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 for cellular phones. Round your answer to two decimal places. %
c. Determine the selling price of cellular phones. Round to the nearest cent. $ per cellular phone
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 9,000 units of cell phones are as follows:
| Variable costs per unit: | Fixed costs: | |||
| Direct materials | $ 75 | Factory overhead | $339,700 | |
| Direct labor | 35 | Selling and administrative expenses | 119,300 | |
| Factory overhead | 23 | |||
| Selling and administrative expenses | 17 | |||
| Total variable cost per unit | $150 | |||
Smart Stream desires a profit equal to a 15% return on invested assets of $916,560.
a. Determine the total costs and the total cost amount per unit for the production and sale of 9,000 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 for cellular phones. Round your answer to two decimal places. %
c. Determine the selling price of cellular phones. Round to the nearest cent. $ per cellular phone
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