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Exam 24: Differential Analysis and Product Pricing

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Question 91

Multiple Choice

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

A) demand-based concept
B) total cost concept
C) cost-plus concept
D) competition-based concept

E) None of the above
F) All of the above

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Question 92

Multiple Choice

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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?

A) $30,000 cost decrease
B) $180,000 cost increase
C) $30,000 cost increase
D) $180,000 cost decrease

E) All of the above
F) A) and C)

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Question 93

Multiple Choice

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

Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.

Match each of the definitions that follow with the term (a-e) it defines. -A document that initiates a product or process change

Which equation better describes target costing?

Determine the markup percentage on product cost.

Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard,Inc.at a price of $65 per board.Mighty Safe is considering making its own boards.The costs to make the board are as follows: direct materials,$32 per unit; direct labor,$10 per unit; and variable factory overhead,$16.00 per unit.Fixed costs for the plant would increase by $75,000.Which option should be selected and why?

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

What cost concept used in applying the cost-plus approach to product pricing covers selling expenses,administrative expenses,and desired profit in the markup?

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

Ptarmigan Company produces two products.Product A has a contribution margin of $20 and requires 4 machine hours.Product B has a contribution margin of $18 and requires 3 machine hours.Determine the most profitable product assuming the machine hours are the constraint.

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)