Smart Stream Inc. uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 6,500 units of cellular phones are as follows: Variable costs: Fixed costs: Direct materials $ 85 per unit Factory overhead $279,000 Direct labor 39 Selling and admin. exp. 98,000 Factory overhead 26 Selling and admin. exp. 20 Total $170 per unit Smart Stream wants a profit equal to a 16% rate of return on invested assets of $833,630. a. Determine the total costs and the total cost amount per unit for the production and sale of 6,500 units of cellular phones. Round the cost per unit to two decimal places. Total costs $fill in the blank 1 Cost amount per unit $fill in the blank 2 b. Determine the total cost markup percentage (rounded to two decimal places) for cellular phones. fill in the blank 3% c. Determine the selling price of cellular phones. Round to the nearest cent. $fill in the blank 4per phone
Smart Stream Inc. uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 6,500 units of cellular phones are as follows: Variable costs: Fixed costs: Direct materials $ 85 per unit Factory overhead $279,000 Direct labor 39 Selling and admin. exp. 98,000 Factory overhead 26 Selling and admin. exp. 20 Total $170 per unit Smart Stream wants a profit equal to a 16% rate of return on invested assets of $833,630. a. Determine the total costs and the total cost amount per unit for the production and sale of 6,500 units of cellular phones. Round the cost per unit to two decimal places. Total costs $fill in the blank 1 Cost amount per unit $fill in the blank 2 b. Determine the total cost markup percentage (rounded to two decimal places) for cellular phones. fill in the blank 3% c. Determine the selling price of cellular phones. Round to the nearest cent. $fill in the blank 4per phone
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 6,500 units of cellular phones are as follows:
| Variable costs: | Fixed costs: | |||
| Direct materials | $ 85 | per unit | Factory |
$279,000 |
| Direct labor | 39 | Selling and admin. exp. | 98,000 | |
| Factory overhead | 26 | |||
| Selling and admin. exp. | 20 | |||
| Total | $170 | per unit |
Smart Stream wants a profit equal to a 16% rate of
a. Determine the total costs and the total cost amount per unit for the production and sale of 6,500 units of cellular phones. Round the cost per unit to two decimal places.
| Total costs | $fill in the blank 1 |
| Cost amount per unit | $fill in the blank 2 |
b. Determine the total cost markup percentage (rounded to two decimal places) for cellular phones.
fill in the blank 3%
c. Determine the selling price of cellular phones. Round to the nearest cent.
$fill in the blank 4per phone
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