close solutoin list

Total cost concept of product pricing Based on the data presented in Exercise 25-18, assume that Smart Stream Inc. uses the total cost concept of applying the cost-plus approach to product pricing. 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.

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 25.26EX
Textbook Problem

Total cost concept of product pricing

Based on the data presented in Exercise 25-18, assume that Smart Stream Inc. uses the total cost concept of applying the cost-plus approach to product pricing.

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.

Expert Solution

a)

To determine

Product pricing: Product pricing is the method used for fixing the price for the products sold or the services offered to the consumers.

Target cost concept:   Target cost is the estimated cost of the product which is calculated on the basis of sustainable price in the marketplace.

Target Cost = Expected Selling Price – Desired Profit

To Determine: The total cost and total cost per unit for the production and sale of 10,000 cellular phones.

Explanation of Solution

Total Cost: Total cost refers to the costs involved in the production of the product.

Calculate the total cost for the production of 10,000 cellular phones.

<

Total Cost:

      Variable Cost ($240 × 10,000 units)````

$2,400,000
      Fixed Cost ($350,000 + $140,000) $490,000
Expert Solution

b)

To determine
The total cost markup percentage (round up to two decimal places) for cellular phones.

Expert Solution

c)

To determine
The selling price per unit of cellular phone.

Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution

Chapter 25 Solutions

Accounting
Show all chapter solutions
Ch. 25 - Under what conditions might a company use...Ch. 25 - Lease or sell Duncan Company owns a machine with a...Ch. 25 - Lease or sell Timberlake Company owns equipment...Ch. 25 - Discontinue a segment Product Alpha has revenue of...Ch. 25 - Discontinue a segment Product B has revenue of...Ch. 25 - Make or buy A restaurant bakes its own bread for a...Ch. 25 - Make or buy A company manufactures various sized...Ch. 25 - Replace equipment A machine with a book value of...Ch. 25 - Replace equipment A machine with a book value of...Ch. 25 - Process or sell Product K is produced for 155 per...Ch. 25 - Process or sell Product D is produced for 24 per...Ch. 25 - Accept business at special price Product AA is...Ch. 25 - Accept business at special price Product A is...Ch. 25 - Product cost markup percentage Light force Inc....Ch. 25 - Product cost markup percentage Green Thumb Garden...Ch. 25 - Bottleneck profit Product A has a unit...Ch. 25 - Bottleneck profit Product K has a unit...Ch. 25 - Activity-based costing Mainline Marine Company has...Ch. 25 - Activity-based costing Casual Cuts Inc. has total...Ch. 25 - Differential analysis for a lease-or-sell decision...Ch. 25 - Differential analysis for a lease-or-buy decision...Ch. 25 - Differential analysis for a discontinued product A...Ch. 25 - Differential analysis for a discontinued product...Ch. 25 - Segment analysis for a service company Charles...Ch. 25 - Decision to discontinue a product On the basis of...Ch. 25 - Make or buy decision Diamond Computer Company has...Ch. 25 - Make-or-buy decision for a service company The...Ch. 25 - Machine replacement decision A company is...Ch. 25 - Differential analysis for machine replacement Kim...Ch. 25 - Sell or process further Big Fork Lumber Company...Ch. 25 - Sell or process further Rise N Shine Coffee...Ch. 25 - Decision on accepting additional business...Ch. 25 - Accepting business at a special price Portable...Ch. 25 - Dedsion on accepting additional business...Ch. 25 - Accepting business at a special price for a...Ch. 25 - Product cost concept of product pricing La Femme...Ch. 25 - Product cost concept of product costing Smart...Ch. 25 - Target costing Toyota Motor Corporation uses...Ch. 25 - Target costing Instant Image Inc. manufactures...Ch. 25 - Product decisions under bottlenecked operations...Ch. 25 - Product decisions under bottlenecked operations...Ch. 25 - Activity-based costing CardioTrainer Equipment...Ch. 25 - Activity-based costing Zeus Industries...Ch. 25 - Activity rates and product costs using...Ch. 25 - Total cost concept of product pricing Based on the...Ch. 25 - Variable cost concept of product pricing Based on...Ch. 25 - Differential analysis involving opportunity costs...Ch. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Differential analysis for further processing The...Ch. 25 - Product pricing using the cost-plus approach...Ch. 25 - Product pricing and profit analysis with...Ch. 25 - Activity-based costing Pure Cane Sugar Company...Ch. 25 - Differential analysis involving opportunity costs...Ch. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Differential analysis for further processing The...Ch. 25 - Product pricing using the cost-plus approach...Ch. 25 - Product pricing and profit analysis with...Ch. 25 - Activity-based costing Southeastern Paper Company...Ch. 25 - Ethics in Action Aaron McKinney is a cost...Ch. 25 - Communication The following conversation took...Ch. 25 - Decision on accepting additional business A...Ch. 25 - Accept business at a special price for a service...Ch. 25 - Identifying product cost distortion Peachtree...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
What is the Occupational Safety and Health Act?

Foundations of Business (MindTap Course List)

REPLACEMENT ANALYSIS The Erley Equipment Company purchased a machine 5 years ago at a cost of 90,000. The machi...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)