Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 12

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:

Smart Stream desires 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.