Problem 23-4B Pricing using total cost, target cost, and variable costP6 ComPro is designing a new smartphone. Each unit of this new phone will require $285 of direct materials; $10 of direct labor; $30 of variable overhead; $5 of variable selling, general, and administrative costs; $14 of fixed overhead costs; and $16 of fixed selling, general, and administrative costs. 1. Compute the selling price per unit if the company uses the total cost method and plans a markup of 220% of total costs. 2. The company is a price-taker and the expected selling price for this type of phone is $1,000 per unit. Compute the target cost per unit if the company's target profit is 60% of expected selling price. 3. Compute the selling price per unit if the company uses the variable cost method and plans a markup of 250% of variable costs.

Problem 23-4B Pricing using total cost, target cost, and variable costP6 ComPro is designing a new smartphone. Each unit of this new phone will require $285 of direct materials; $10 of direct labor; $30 of variable overhead; $5 of variable selling, general, and administrative costs; $14 of fixed overhead costs; and $16 of fixed selling, general, and administrative costs. 1. Compute the selling price per unit if the company uses the total cost method and plans a markup of 220% of total costs. 2. The company is a price-taker and the expected selling price for this type of phone is $1,000 per unit. Compute the target cost per unit if the company's target profit is 60% of expected selling price. 3. Compute the selling price per unit if the company uses the variable cost method and plans a markup of 250% of variable costs.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.4.1C: Cost-plus and target costing concepts The following conversation took place between Dean Lancaster,...

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