FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Differential Analysis and Product Pricing

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 81

Short Answer

Review LaterAdd Note

Review Later

The Mallory Company produces and sells Product X at a total cost of $35 per unit, of which $28 is product cost and $7 is selling and administrative expenses. In addition, the total cost of $35 is made up of $24 variable cost and $11 fixed cost.  The desired profit is $8 per unit. Determine the markup percentage on product cost.

Correct Answer

verified

Markup per...

View Answer

Show Answer

Question 82

True/False

Review LaterAdd Note

Review Later

In deciding whether to accept business at a special price, the short-run price should be set high enough to cover all variable costs and expenses.

A) True
B) False

Correct Answer

verified

Show Answer

Question 83

Multiple Choice

Review LaterAdd Note

When using the product cost concept of applying the cost-plus approach to product pricing, what is included in the markup?

Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour. Which product has the highest contribution margin per machine hour?

All of the following should be considered in a make-or-buy decision except

Target costing is arrived at by taking

Magpie Corporation uses the total cost concept of product pricing. Below is cost information for the production and sale of 60,000 units of its sole product. Magpie desires a profit equal to a 25% rate of return on invested assets of $700,000. The cost per unit for the production and sale of the company's product is

An unfinished desk is produced for $36.00 and sold for $65.00.  A finished desk can be sold for $75.00.  The additional processing cost to complete the finished desk is $5.95. Provide a differential analysis for further processing.

Mallard Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Mallard desires a profit equal to a 12% rate of return on invested assets of $800,000. The cost per unit for the production of the company's product is

What pricing concept considers the price that other providers charge for the same product?

Make-or-buy decisions should be made only with related parties.

Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the past year indicated a net loss for Product J of $12,250. This net loss resulted from sales of $275,000, cost of goods sold of $186,500, and operating expenses of $85,750. It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed. If Product J is retained, the revenue, costs, and expenses are not expected to change significantly from those of the current year. Because of the large number of products manufactured, the total fixed costs and expenses are not expected to decline significantly if Product J is discontinued. Prepare a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J.

Moon Company uses the variable cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 75,000 units of Product T are as follows: Moon desires a profit equal to an18% rate of return on invested assets of $1,440,000. (a) Determine the amount of desired profit from the production and sale of Product T. (b) Determine the total variable costs for the production and sale of 75,000 units of Product T. (c) Determine the markup percentage for Product T. (d) Determine the unit selling price of Product T. Round your markup percentage to one decimal place and other intermediate calculations and final answer to two decimal places.

Heston and Burton, CPA's, currently work a five-day week. They estimate that net income for the firm would increase by $75,000 annually if they worked an additional day each month. The cost associated with the decision to continue the practice of a five-day work week is an example of a(n)

The Swan Company produces its product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit and the desired profit is $20 per unit. Determine the markup percentage on variable cost.

Jacoby Company received an offer from an exporter for 30,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: What is the differential revenue from the acceptance of the offer?

The amount of increase or decrease in cost that is expected from a particular course of action as compared with an alternative is

The costs of initially producing an intermediate product should be considered in deciding whether to further process a product, even though the costs will not change, regardless of the decision.

Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20 per pound and costs $15.75 per pound to produce. Product D would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. What is the differential revenue of producing Product D?

The condensed income statement for a Hayden Corp. for the past year is as follows: Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T?