FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 9: Differential Analysis, Product Pricing, and Activity-Based Costing

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

The variable cost per unit for the production and sale of the company's product is

A) $14.00
B) $12.60
C) $9.80
D) $11.20

E) All of the above
F) B) and D)

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

The dollar amount of desired profit from the production and sale of the company's product is

A) $89,600
B) $39,200
C) $70,000
D) $84,000

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Determine the markup percentage on variable cost.

Under the variable cost concept, only variable costs are included in the cost amount per unit to which the markup is added.

Sparrow Co.is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $8.00 a unit.The unit cost for Sparrow Co.to make the part is $9.00, which includes $0.60 of fixed costs.If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?

Yasmin Co.can further process Product B to produce Product C.Product B is currently selling for $30 per pound and costs $28 per pound to produce.Product C would sell for $55 per pound and would require an additional cost of $31 per pound to produce.What is the differential cost of producing Product C?

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

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

Finch, Inc.has bought a new server and must decide what to do with the old one.The cost of the old server was originally $60,000 and has been depreciated $45,000.The company has received two offers.One offer was made to purchase the equipment outright for $18,500 less a 5% sales commission.The other offer was to lease the equipment for $7,000 for the next five years but the company will be required to provide maintenance and insurance totaling $3,000 per year.What offer should Finch, Inc.accept?

Which of the following reasons would cause a company to reject an offer to accept business at a special price?

The lowest contribution margin per scarce resource is the most profitable.

Match each of the definitions that follow with the term a-e it defines. -Not relevant to future decisions

The amount of income that would result from an alternative use of cash is called opportunity cost.

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.

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

Differential revenue is the amount of income that would result from the best available alternative proposed use of cash.

Piper Corp.is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit.The unit cost for the business to make the part is $36, including fixed costs, and $26, not including fixed costs.If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?

What is the target cost of the company's product?

When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.

The markup percentage for the sale of the company's product is