Chapter 11, Problem 17E

Product cost method of product costing

Smart Stream Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell phones are as follows:

Smart Stream desires a profit equal to a 30% return on invested assets of $1,200,000.

1. A. Determine the amount of desired profit from the production and sale of 10,000 cell phones.
2. B. Determine the product cost per unit for the production of 10,000 cell phones.
3. C. Determine the product cost markup percentage for cell phones.
4. D. Determine the selling price of cell phones.