Smart Stream Inc. uses the variable cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell 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 variable cost per unit $240 Smart Stream desires a profit equal to a 30% 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 $fill in the blank 1 Variable cost amount per unit $fill in the blank 2 b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places. fill in the blank 3 % c. Determine the selling price of cellular phones. If required, round to the nearest dollar. $fill in the blank 4 per cellular phone
Smart Stream Inc. uses the variable cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell 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 variable cost per unit $240 Smart Stream desires a profit equal to a 30% 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 $fill in the blank 1 Variable cost amount per unit $fill in the blank 2 b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places. fill in the blank 3 % c. Determine the selling price of cellular phones. If required, round to the nearest dollar. $fill in the blank 4 per cellular phone
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variable Cost Method of Product Pricing
Smart Stream Inc. uses the variable cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell phones are as follows:
| Variable costs per unit: | Fixed costs: | ||||||
| Direct materials | $150 | Factory |
$350,000 | ||||
| Direct labor | 25 | Selling and admin. exp. | 140,000 | ||||
| Factory overhead | 40 | ||||||
| Selling and administrative expenses | 25 | ||||||
| Total variable cost per unit | $240 |
Smart Stream desires a profit equal to a 30% 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 | $fill in the blank 1 |
| Variable cost amount per unit | $fill in the blank 2 |
b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places.
fill in the blank 3 %
c. Determine the selling price of cellular phones. If required, round to the nearest dollar.
$fill in the blank 4 per cellular phone
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