Variable Cost Concept of Product Pricing
Smart Stream Inc. uses the variable cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 4,500 units of cellular phones are as follows:
Variable costs: | Fixed costs: | |||
Direct materials | $ 90 | per unit | Factory |
$223,800 |
Direct labor | 41 | Selling and admin. exp. | 78,600 | |
Factory overhead | 27 | |||
Selling and admin. exp. | 22 | |||
Total | $180 | per unit |
Smart Stream wants a profit equal to a 15%
a. Determine the variable costs and the variable cost amount per unit for the production and sale of 4,500 units of cellular phones. Round to two decimal places.
Total variable costs | $fill in the blank 1 |
Variable cost amount per unit | $fill in the blank 2 |
b. Determine the variable cost markup percentage for cellular phones.
fill in the blank 3 %
c. Determine the selling price of cellular phones. Round to the nearest cent.
$fill in the blank 4 per cellular phone
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