Total cost method of product pricing
Smart Stream Inc. uses the total cost method of applying the costplus approach to product pricing. The costs of producing and selling units of cell phones are as follows:
Variable costs per unit:
Direct materials $
Direct labor
Factory overhead
Selling and administrative expenses
Total variable cost per unit $
Fixed costs:
Factory overhead
$
Selling and administrative expenses
Smart Stream desires a profit equal to a return on invested assets of $
a Determine the total costs and the total cost amount per unit for the production and sale of cell 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 cell phones. Round your answer to two decimal places.
c Determine the selling price of cell phones. Round to the nearest cent.
per cell phone
