A Determine the variable cost and the variable cost amount p

Print Item Variable Cost Method of Product Pricing Smart Stream Inc. uses the variable cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 ce phones are as follows Variable costs per unit: Fixed costs Direct materials Direct labor Factory overhead $150 25 40 Selling and administrative expenses25 $240 Factory overhead $350,000 140,000 Selling and admin, exp. Total variable cost per unit Smart Stream desires a profit equal to a 30% return on invested assets of $1,200.000. a. Determine the variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones Total variable cost Variable cost amount per unit b. Determine the variable cost markup percentage for cellular phones. Round to two decimal places c. Determine the selling price of cellular phones. If required, round to the nearest dollar. per cellular phone Check My Work

Solution

Total Variable cost and Variable cost per unit: material (150*10000) 1500000 labour (25*10000) 250000 Manufacturing OH (40*10000) 400000 Selling OH (25*10000) 250000 Total variable cost   2400000 Units 10000 VC per unit 240 Fixed cost (350000+140000) 390000 Desired profits: (1200000*30%) 360000 Total markup required 750000 Markup required per unit 75 Markup % on VC (75/240): 31.25% Selling price per unit: VC per unit 240 Maarkup % 75 Selling price per unit: 315