Question

Asked Dec 1, 2019

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Smart Stream Inc. uses the total cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,500 units of cell phones are as follows:

Variable costs per unit: | Fixed costs: | |||

Direct materials | $ 92 | Factory overhead | $256,400 | |

Direct labor | 42 | Selling and administrative expenses | 90,100 | |

Factory overhead | 28 | |||

Selling and administrative expenses | 22 | |||

Total variable cost per unit | $184 |

Smart Stream desires a profit equal to a 14% return on invested assets of $756,880.

**a. **Determine the total costs and the total cost amount per unit for the production and sale of 5,500 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

Step 1

Cost plus approach involves addition of a mark-up value to the total cost.

Computation of Total Cost

Step 2

Mark-up Va...

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