Question Completion:
Assume Apple is designing a new smartphone. Each unit of this new phone is expected to require $230 of direct materials, $10 of direct labor, $20 of variable overhead, and $20 of variable selling and administrative costs.
Answer:
Apple
1. The expected selling price per unit of this new phone is:
= $860.
2. Apple's target cost if the company desires a profit of 60% of the sales price is:
= $320.
Step-by-step explanation:
a) Data and Calculations:
Method of setting prices = 200% Markup on Variable Cost
Direct materials cost per unit = $230
Direct labor cost per unit = $10
Variable overhead cost per unit = $20
Variable selling and administrative cost per unit = $20
Total variable cost = $280
Markup = $560
Expected selling price = $840
Selling price per unit = $800
Target profit of sales price = 480
Target cost = $320
= $800 * (100 - 60)
= $320