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Product cost concept of product costing Smart Stream Inc. uses the product 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 administrative expenses 140,000 Factory overhead 40 Selling and administrative expenses 25 Total $240 Smart Stream wants a profit equal to a 30% rate of return on invested assets of $1,200,000. a. Determine the amount of desired profit from the production and sale of 10,000 cellular phones. b. Determine the product cost and the cost amount per unit for the production of 10,000 cellular phones. c. Determine the product cost markup percentage for cellular phones. d. Determine the selling price of cellular phones.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 25, Problem 25.18EX
Textbook Problem

Product cost concept of product costing

Smart Stream Inc. uses the product 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 administrative expenses 140,000
Factory overhead 40    
Selling and administrative expenses 25    
Total $240    

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

a. Determine the amount of desired profit from the production and sale of 10,000 cellular phones.

b. Determine the product cost and the cost amount per unit for the production of 10,000 cellular phones.

c. Determine the product cost markup percentage for cellular phones.

d. Determine the selling price of cellular phones.

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Chapter 25 Solutions

Accounting
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