Answered: Smart Stream Inc. uses the total cost…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 17E: Product cost method of product costing Smart Stream Inc. uses the product cost method of applying...

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Question

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

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