Smart Stream Inc. uses the total cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 3,500 units of cell phones are as follows: Variable costs per unit: Fixed costs: Direct materials $77 Factory overhead $134,700 Direct labor 35 Selling and administrative expenses 47,300 Factory overhead 23 Selling and administrative expenses 19 Total variable cost per unit $154 Smart Stream desires a profit equal to a 14% return on invested assets of $422,300. a. Determine the total costs and the total cost amount per unit for the production and sale of 3,500 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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 3,500 units of cell phones are as follows:
Variable costs per unit:
Fixed costs:
Direct materials
$ 77
Factory overhead
$134,700
Direct labor
35
Selling and administrative expenses
47,300
Factory overhead
23
Selling and administrative expenses
19
Total variable cost per unit
$154
Smart Stream desires a profit equal to a 14% return on invested assets of $422,300.
a. Determine the total costs and the total cost amount per unit for the production and sale of 3,500 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
Transcribed Image Text: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 3,500 units of cell phones are as follows: Variable costs per unit: Fixed costs: Direct materials $ 77 Factory overhead $134,700 Direct labor 35 Selling and administrative expenses 47,300 Factory overhead 23 Selling and administrative expenses 19 Total variable cost per unit $154 Smart Stream desires a profit equal to a 14% return on invested assets of $422,300. a. Determine the total costs and the total cost amount per unit for the production and sale of 3,500 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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