Exam 16: The Art and Science of Pricing to Optimize Revenue

The last step in the target costing for target pricing approach is

Given below are business practices related to pricing situations, Match the descriptions with the appropriate pricing term -Selling products at a lower price internationally than in the home country.

You are given the scenarios below. Select the appropriate effect based on the relationship between a product's cost, price, and profit. -Charging too much

Kissimee Corporation manufactures a high-performance product. It expects to produce and sell 50,000 of these products in the upcoming year. It has invested $15,000,000 to make these products and has a desired return on investment (ROI) of 20%. If the current market price for similar high-performance products is $500, what is Kissimee Corporation's target cost for the product?

Two competitors, Sirius Satellite Radio and XM Satellite Radio own the market for satellite radio. They are constantly trying to one-up the other by creating new listening options for users. Recently, some newcomers to the market are eroding their combined market share. Despite their differences, these two companies feel that they could be stronger if they worked together on a project. The decide to set subscription prices for their services extremely low while still offering all options that customers have come to appreciate. What pricing tactic are these two companies employing?

Which of the following statements is correct regarding pricing for a company's product or service?

Although formulas can be used to compute unit selling prices, which of the following is a key factor in determining product/service pricing and is very hard to measure?

Gadgets Inc. produces a product which has a unit variable cost of $12 and a unit fixed cost of $8. The company currently sells its products to customers at a unit selling price of $40. A regional wholesaler has offered to purchase 1,000 units of Gadgets' product at a unit selling price of $20. Due to the current economic situation, Gadgets has sufficient capacity to produce and sell the special-order units without incurring additional fixed costs. Should this Gadgets Inc. accept or reject this special order and why?

Sustainable Solutions, LLC makes bracelets from recycled plastic. Each bracelet costs $6 to produce, of which $4 is variable and $2 is fixed. If Sustainable Solutions applies a 30% markup to each bracelet, what is the selling price for a single bracelet?

Given below are business practices related to pricing situations, Match the descriptions with the appropriate pricing term -When two or more competitors agree to set prices at a given level, usually higher than the equilibrium price.

If a company has the opportunity for a special order, but is currently operating at full capacity and is unable to add additional production capacity to fulfill the special order,

The formula used to compute a Target Cost per Unit is

Cannon Corporation uses a cost-plus pricing model based on full cost. Below is cost information for the production and sale of 50,000 units of its sole product. Cannon desires a profit equal to a 20% return on invested assets of $700,000. a. What is the total cost per unit per unit for the company's product? b. What is the ROI or desired profit per unit for the company's product? c. What is the markup percentage for this product? (round to 2 decimal places) d. What is the expected selling price for the company's product?

Maxim Company produces a designer wall clock which has a unit variable cost of $15 and a unit fixed cost of $9. The company currently sells its products to customers at a unit selling price of $50. A regional company has offered to purchase 500 of Maxim's clocks at a unit selling price of $24 but would like to have the clocks customized with its company logo. The customization will cost an additional $5 per clock. Due to the current economic situation, Maxim has sufficient excess capacity to produce and sell the special-order units without incurring additional fixed costs. Should this Maxim accept or reject this special order and why?

Exelon charges its customers a higher rate for electricity during the day-time peak usage period than in the evening. This pricing practice is referred to as

The unit selling price is computed in the cost-plus method for pricing as

When one company makes a deal with another company to set a price at a given level for a product or service, which is usually higher than the equilibrium price in competitive markets, this act is called

Mambo Manufacturing Company has a normal production capacity of 40,000 units per month. Because of an excess amount of inventory on hand, it expects to produce only 30,000 units in July. Monthly fixed costs and expenses are $120,000 ($3 per unit at normal plant capacity) and variable costs and expenses are $8.75 per unit. The present selling price is $14.75 per unit. The company has an opportunity to sell 8,500 additional units at $9.50 per unit to a company who plans to market the product under its own brand name in a foreign market. The additional business will not affect the regular selling price or quantity of sales of Mambo Manufacturing Company.Prepare a differential analysis for the proposal to sell at the special price.

Target costing for target pricing

Crescent Computers produces a combination wireless computer keyboard and mouse. The market for this product combination is very competitive. The current market price for a wireless computer keyboard and mouse is $30. If Crescent Computers desires to make a profit of $9 per unit of the wireless computer keyboard and mouse, what is the target cost to manufacture the wireless computer keyboard and mouse?