(Answered) Question - total cost concept of product pricingsmart

Accounting

Question - 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 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 total costs and the total cost amount per unit for the production and sale of 10,000 cellular phones.

b. Determine the total cost markup percentage (rounded to two decimal places) for cellular phones.

c. Determine the selling price of cellular phones. Round to the nearest dollar.

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