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Cell Plus Inc. uses the net cost concept of applying the cost-plus approach to product pricing. The cost of selling and producing 5,000 units of cellular phones are as given:
Variable Costs: Fixed Costs:
Direct Materials $125 per unit Factory Overhead $215,000
Direct Labor 45 Selling and admin exp. 75,000
Factory Overhead 40 Selling & admin exp 30
Total $240 per unit
A. Cell Plus uses the product cost idea of applying the cost-plus method to product pricing.
B. Cell Plus uses the variable cost idea of applying the cost-plus method to product pricing.
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