Based on the data presented in Exercise 25-17, assume that Smart Stream Inc. uses the total cost concept of applying

Based on the data presented in Exercise 25-17, 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.

Answer:

a. Total costs: 

Variable ($240 × 10,000 units)………………………………………………… $2,400,000 

Fixed ($350,000 + $140,000)………………………………………………………   490,000 

Total……………………………………………………………………………………… $2,890,000 

Cost amount per unit:  $2,890,000 ÷ 10,000 units = $289 

b. Markup percentage = 

Markup percentage = 

Desired Profit 

Total Costs 

$360,000* 

$2,890,000 

Markup percentage = 12.46% (rounded) 

* $1,200,000 × 30% = $360,000 

c. Cost amount per unit………………………………………………………………… $289 

Markup ($289 × 12.46%)………………………………………………………………     36 

Selling price…………………………………………………………………………… $325