Exam 15: Target Costing and Cost Analysis for Pricing Decisions

Consider the following statements about time and material pricing: I. The time charge includes the direct cost of an employee's time. II. The time charge includes an amount to cover various overhead costs. III. The material charge includes a handling charge for material. Which of the above statements is (are) true?

The following costs relate to Tower Company: Variable manufacturing cost, $30; variable selling and administrative cost, $8; applied fixed manufacturing overhead, $15; and allocated fixed selling and administrative cost, $4. -If Tower uses total-cost pricing formulas, the company's markup percentage would be computed on the basis of:

The following data pertain to Ronaldo Enterprises: What price will the company charge if the firm uses cost-plus pricing based on absorption manufacturing cost and a markup percentage of 110%?

When a computer-integrated manufacturing (CIM) system is used, the process of target costing sometimes is computerized.

Use the following information to answer the following Questions Ralph’s Auto Repair uses time and material pricing. The body shop, which anticipates 10,000 direct labor hours of activity, has the following data: -If a particular job takes 20 hours of labor and $800 of materials, the price charged for the job is:

Shocker Electrical, which installs sophisticated electronic-control systems in new homes, prices jobs by using the time-and-materials method. The following data apply to a job for ABC Builders: Labor hours: 180 Materials cost: $48,000 The following predictions, based on 30,000 direct labor hours, pertain to the company's operations for the year: Shocker Electrical adds a markup of $15 per hour on its time charges, but there is no profit markup on material costs. Required: Calculate the price for the ABC Builders' job.

Collins Company uses cost-plus pricing and has calculated total variable manufacturing cost, total absorption manufacturing cost, and total cost for one of its products. Which of these costs would be the smallest?