Exam 24: Differential Analysis and Product Pricing

If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48,the differential cost for this situation is $48.

The theory of constraints is a manufacturing strategy that focuses on reducing the influence of bottlenecks on a process.

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

What pricing concept is used if all costs are considered and a fair markup is added to determine the selling price?

Jamison Company produces and sells Product X at a total cost of $25 per unit,of which $15 is product cost and $10 is selling and administrative expenses.In addition,the total cost of $25 is made up of $14 variable cost and $11 fixed cost.The desired profit is $5 per unit.Determine the markup percentage on total cost.

MZE Manufacturing Company has a normal plant capacity of 37,500 units per month.Because of an extra-large quantity of inventory on hand,it expects to produce only 30,000 units in May.Monthly fixed costs and expenses are $112,500 ($3 per unit at normal plant capacity)and variable costs and expenses are $8.25 per unit.The present selling price is $13.50 per unit.The company has an opportunity to sell 7,500 additional units at $9.90 per unit to an exporter who plans to market the product under its own brand name in a foreign market.The additional business is therefore not expected to affect the regular selling price or quantity of sales of MZE Manufacturing Company. ​ Prepare a differential analysis report,dated April 21 of the current year,on the proposal to sell at the special price.

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

A practical approach that is frequently used by managers when setting normal long-run prices is the

An employee of Morgan Corporation has found some partially completed units of Model X in a dusty corner of the warehouse.A job ticket attached to the units indicates that a total of $750 in manufacturing costs have been used to bring the materials to this point in the manufacturing process.The units can be sold in their current condition for $275 to a scrap metal dealer.If Morgan spends $250 to complete the units,they could be sold for $600. ​ (a)What should Morgan do? Why? (b)Identify the sunk cost,if any.

Under the total cost concept,manufacturing cost plus desired profit is included in the total cost per unit.

What is the activity rate for general overhead?

Match the definitions that follow with the term (a-e)it defines. -Combines market-based pricing with a cost-reduction emphasis

Falcon Inc.manufactures Product B,incurring variable costs of $15.00 per unit and fixed costs of $70,000.Falcon desires a profit equal to a 12% rate of return on assets,$785,000 of assets are devoted to producing Product B,and 100,000 units are expected to be produced and sold. Round your intermediate calculations and final answer to two decimal places.

Using the variable cost concept,determine the markup per unit for 30,000 units using the following data: ​ Variable cost per unit $15.00 Total fixed costs $90,000 Desired profit $150,000

A cost that will not be affected by later decisions is termed a(n)

The costs of initially producing an intermediate product should be considered in deciding whether to further process a product,even though the costs will not change,regardless of the decision.

The desired selling price for a product will be the same under both variable and total cost.

Crane Company Division B recorded sales of $360,000,variable cost of goods sold of $315,000,variable selling expenses of $13,000,and fixed costs of $61,000; creating a loss from operations of $29,000.Determine the differential income or loss from the sales of Division B.Should this division be discontinued?

Sensational Soft Drinks makes three products: iced tea,soda,and lemonade.The following data are available: ​ Sensational is experiencing a bottleneck in one of its processes that affects each product as follows: ​

Activity-based costing provides more accurate and useful cost data than traditional systems.