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Variable Cost Concept of Product Pricing Smart Stream Inc. uses the variable 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 variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones. Total variable costs Variable cost amount per unit b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places. c. Determine the selling price of cellular phones. If required round to the nearest dollar. per phone

Variable Cost Concept of Product Pricing Smart Stream Inc. uses the variable 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 variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones. Total variable costs Variable cost amount per unit b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places. c. Determine the selling price of cellular phones. If required round to the nearest dollar. per phone

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variable Cost Concept of Product Pricing Smart Stream Inc. uses the variable 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 Fixed costs: $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 variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones. Total variable costs Variable cost amount per unit b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places. % c. Determine the selling price of cellular phones. If required round to the nearest dollar per phone
Transcribed Image Text:Variable Cost Concept of Product Pricing Smart Stream Inc. uses the variable 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 Fixed costs: $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 variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones. Total variable costs Variable cost amount per unit b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places. % c. Determine the selling price of cellular phones. If required round to the nearest dollar per phone
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