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

Lumina Industries produces and sells outdoor solar lighting fixtures. A solar spotlight has a total cost of $40 per unit, of which $30 is variable cost and $10 is fixed cost. The desired profit is $10 per unit. Determine the markup percentage on total cost.

You are presented with the following three scenarios for Sing Company: With regards to Sing's price, cost, and product, what can be concluded from Scenario 2?

Given below are business practices related to pricing situations, Match the descriptions with the appropriate pricing term -Intentionally selling products at prices that are lower than their costs to drive out competition.

The primary decision to sell a product or service is whether a firm

Which of the following statements is correct if a company accepts a special order without having to add capacity or affecting current sales?

Sylvia Strohm has decided to open her own dog grooming service, Puppy Scrub. She is trying to decide whether she wants to offer services doing mobile grooming or have a set location for the dog grooming business. She has analyzed cost and pricing information for both options and has arrived at the following financial data: a. What is the total cost per dog-grooming service under the Mobile Option? b. What is the total cost per dog-grooming service under the Set Location Option? c. What is the ROI per dog-grooming service under the Mobile Option? d. What is the ROI per dog-grooming service under the Set Location Option? e. What is the markup percentage per dog-grooming service under the Mobile Option? f. What is the markup percentage per dog-grooming service under the Set Location Option? g. What is the selling price per dog-grooming service under the Mobile Option assuming Sylvia uses a cost-plus pricing model? h. What is the selling price per dog-grooming service under the Set Location Option assuming Sylvia uses a cost-plus pricing model? i. Using the current market price per dog-grooming service for the Mobile Option, what is the target cost for Puppy Scrub? j. Using the current market price per dog-grooming service for the Set Location Option, what is the target cost for Puppy Scrub? k. Which option would you recommend to Sylvia for opening her new dog-grooming business? Explain why.

The cost-plus method for pricing a company's products is used in markets where

What two question does a company need to address when using a target costing approach?

Recently, Shasta Corporation has decided to play a more-active role in the soda beverage industry. It is aware that the current market price for a can of soda is $2.00. Shasta plans to sell 100,000 cans of soda in its first year and would like to generate an ROI of 20% on its invested assets of $600,000. Using the target costing for target pricing approach, what will Shasta's target cost per unit be?

Collusive pricing is the same as

Target costing for target pricing is

Massano Motors expects to produce 10,000 motors during the upcoming year. It has budgeted for the following: net income of $200,000; variable costs of $500,000; and fixed costs of $300,000. The company has invested assets of $1,000,000 and a budgeted return on investment (ROI) of 20%. What is the budgeted markup percentage used in pricing each motor using a cost-plus method of pricing?

Agway Company sells a product in a competitive marketplace. Market analysis indicates that their product would probably sell at $28.00 per unit. Agway Company management desires a profit equal to a 25% rate of return on invested assets of $1,400,000. They anticipate selling 50,000 units. Its current full cost per unit for the product is $25 per unit. a. What is the desired profit per unit for Agway Company? b. What is the expected selling price for Agway Company using a target costing approach? c. What is the target cost per unit for Agway Company?

Ford offers a special $1,000 incentive to its loyal customers to be used toward the purchase or lease of any new Ford vehicle. This is an example of

Explain what is included in the total cost when using a full cost approach for the cost- plus pricing approach.

If a company sets its price too low for a product or service, or reduces its unit selling price,

When is the cost-plus pricing method used by a company? Explain

Which of the following pricing behaviors is considered a criminal violation under the Sherman Antitrust Act?

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

Synergy Technologies produces wireless keyboards for computers. The costs associated with production of 10,000 units are variable costs of $80,000 and fixed costs of $30,000. The budgeted operating income at 10,000 units is $200,000. What is the expected unit selling price if Synergy uses a cost-plus method based on full cost?