Based on the data presented in exercise 25-15, assume that Sirrus phone Company

Question

Based on the data presented in exercise 25-15, assume that Sirrus phone Company uses the variable cost concept of applying the cost-plus approach to product pricing.

a. Determine the total manufacturing costs and the cost amount per unit for the production and sale of 3500 units of mobile phones.

b. Determine the markup percentage (round to two decimal places) for mobile phones.

c. Determine the selling price of mobile phones. Round to the nearest dollar.

this is the original link to that question with the answer

https://www.chegg.com/homework-help/questions-and-answers/sirrus-phone-company-uses-total-cost-concept-applying-cost-plus-approach-product-pricing-c-q1448386

Explanation / Answer

Given

variable costs fixed costs
Direct materials $130.00 per unit Factory o/h $175,000
Direct labor 50.00 Selling/admin exp $ 70,000
Factory overhead 35.00
Selling/admin exp 25.00
Total $240.00

Sirrus desires a profit equal to a 30% rate of return on invested assets of $350,000

For 3500 units PARTICULARS Amount Amount Amount Sales 340 1190000 Less: Variable Cost 240 840000 Materials (130 x 3500) 455000 Labor (50x3500) 175000 Factory Overhead (35x3500) 122500 Selling / Admin Exp (25x3500) 87500 CONTRIUTION 350000 Less: Fixed cost 245000 Factory Overhead 175000 Selling / Admin Exp 70000 Profit Expeected (350000 x 30%) 105000 105000 Total Manufacturing costs (840000 + 245000) 1080000 cost per unit (1080000/3500) 308.5714286 Mark up % (105000/1190000) 8.823529412 Selling price $340

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