Financial and Managerial Accounting: E25-15 Sirrus Phone Company uses the total cost concept
Financial and Managerial Accounting
E25-15 Total cost concept of product pricing Sirrus Phone Company uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 3,500 units of mobile phones are as follows: Variable Costs: Fixed Costs: Direct materials 130.00 Factory Overhead 175,000 Direct labor 50.00 Selling and adm. Exp. 70,000 Factory overhead 35.00 Selling and administrative 25.00 Total 240.00
Sirrus desires a profit equal to a 30% rate of return on invested assets of $350,000.
Instruction: a. Determine the amount of desired profit from the production and sale of mobile phones. b. Determine the total costs and the cost amount per unit for the production and sale of 3,500 units of mobile phones. c. Determine the markup percentage (rounded to two decimal places) for mobile phones d. Determine the selling price of mobile phones. Round to the nearest dollar.