Exam 24: Differential Analysis, Product Pricing, and Activity-Based Costing

Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Fixed costs:Factory overhead$25,000Selling and administrative expenses17,000Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500. (a)Determine the amount of desired profit from the production and sale of Product K. (b)Determine the total manufacturing costs and the cost amount per unit for the production of 25,000 units of Product K. (c)Determine the markup percentage for Product K. (d)Determine the selling price of Product K.Round the markup percentage to one decimal place, and other intermediate calculations and final answer to two decimal places.

(Essay)

4.7/5

(36)

Question 21

The differential revenue of producing Product P over Product O is $82 per pound.

(True/False)

4.9/5

(23)

Question 22

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

(True/False)

4.9/5

(28)

Question 23

Use this information for Swan Company to answer the questions that follow. Swan Company produces a 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. -What is the activity rate for general overhead?

(Multiple Choice)

4.9/5

(36)

Question 24

Delaney Company is considering replacing equipment that originally cost $600,000 and that has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation?

(Multiple Choice)

4.9/5

(38)

Question 25

A cost that will not be affected by later decisions is termed a sunk cost.

(True/False)

4.8/5

(38)

Question 26

Swan Company produces a 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 product cost.

(Multiple Choice)

4.9/5

(33)

Question 27

Make-or-buy options often arise when a manufacturer has excess productive capacity in the form of unused equipment, space, and labor.

(True/False)

4.8/5

(36)

Question 28

Using the variable cost concept, determine the markup per unit for 30,000 units using the following data:Variable cost per unit $15Total fixed costs $90,000Desired profit $150,000Round to the nearest dollar.

(Multiple Choice)

4.8/5

(38)

Question 29

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

(Multiple Choice)

4.8/5

(38)

Question 30

Airflow Company sells a product in a competitive marketplace. Market analysis indicates that the product would probably sell at $28.00 per unit. Airflow management desires a profit equal to a 20% rate of return on invested assets of $1,400,000. Airflow anticipates selling 50,000 units. The current full cost per unit for the product is $25.00 per unit. (a) What is the amount of profit per unit? (b) What is the target cost per unit if Airflow meets the market dictated price and management's desired profit?

(Essay)

4.8/5

(38)

Question 31

The total cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.

(True/False)

4.9/5

(29)

Question 32

Match each definition that follows with the term (a-e) it defines. -Not relevant to future decisions

(Multiple Choice)

4.9/5

(30)

Question 33

Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin it can earn per month?

(Multiple Choice)

4.7/5

(28)

Question 34

When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based on ideal levels of performance.

(True/False)

4.8/5

(38)

Question 35

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

(Multiple Choice)

4.9/5

(29)

Question 36

What is the differential cost from the acceptance of the offer?

(Multiple Choice)

4.7/5

(31)

Question 37

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

(Multiple Choice)

5.0/5

(31)

Question 38

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:Domestic unit sales price$21Unit manufacturing costs:Variable12Fixed5What is the differential revenue from the acceptance of the offer?

(Multiple Choice)

4.8/5

(38)

Question 39

Use this information for Dotterel Corporation to answer the questions that follow. ? Dotterel Corporation uses the variable cost concept of product pricing. Below is the cost information for the production and sale of 35,000 units of its sole product. Dotterel desires a profit equal to an 11.2% rate of return on invested assets of $350,000. ?? -The variable cost per unit for the production and sale of the company's product is

(Multiple Choice)

4.8/5

(31)

Question 40

Showing 21 - 40 of 177

The differential revenue of producing Product P over Product O is $82 per pound.

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

Delaney Company is considering replacing equipment that originally cost $600,000 and that has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation?

A cost that will not be affected by later decisions is termed a sunk cost.

Swan Company produces a 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 product cost.

Make-or-buy options often arise when a manufacturer has excess productive capacity in the form of unused equipment, space, and labor.

Using the variable cost concept, determine the markup per unit for 30,000 units using the following data:Variable cost per unit $15Total fixed costs $90,000Desired profit $150,000Round to the nearest dollar.

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

The total cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.

Match each definition that follows with the term (a-e) it defines. -Not relevant to future decisions

Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin it can earn per month?

When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based on ideal levels of performance.

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

What is the differential cost 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

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Capital Investment Analysis

Filters

Exam 24: Differential Analysis, Product Pricing, and Activity-Based Costing

The differential revenue of producing Product P over Product O is $82 per pound.

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

Delaney Company is considering replacing equipment that originally cost $600,000 and that has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation?

A cost that will not be affected by later decisions is termed a sunk cost.

Swan Company produces a 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 product cost.

Make-or-buy options often arise when a manufacturer has excess productive capacity in the form of unused equipment, space, and labor.

Using the variable cost concept, determine the markup per unit for 30,000 units using the following data:​Variable cost per unit $15Total fixed costs $90,000Desired profit $150,000Round to the nearest dollar.

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

The total cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.

Match each definition that follows with the term (a-e) it defines. -Not relevant to future decisions

Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin it can earn per month?

When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based on ideal levels of performance.

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

What is the differential cost 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

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Capital Investment Analysis

Filters

Using the variable cost concept, determine the markup per unit for 30,000 units using the following data:Variable cost per unit $15Total fixed costs $90,000Desired profit $150,000Round to the nearest dollar.