Exam 30: Pricing Products and Services

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The management of Store Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product: Management plans to produce and sell 6,000 units of the new product annually. The new product would require an investment of $1,140,000 and has a required return on investment of 10%. -To the nearest whole percent,the markup percentage on absorption cost is:

(Multiple Choice)

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Question 61

Holding all other things constant,an increase in variable selling costs will affect:

(Multiple Choice)

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Question 62

Holding all other things constant,an increase in variable production costs will affect:

(Multiple Choice)

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Question 63

Dieckman Company makes a product with the following costs: The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 71,000 units per year. The company has invested $360,000 in this product and expects a return on investment of 13%. Direct labor is a variable cost in this company. -The selling price based on the absorption costing approach is closest to:

(Multiple Choice)

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Question 64

If a company sells a product for less than its budgeted unit product cost under absorption costing,then the company will lose money.

(True/False)

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Question 65

A new product,an automated crepe maker,is being introduced at Laguna Corporation.At a selling price of $52 per unit,management projects sales of 90,000 units.Launching the crepe maker as a new product would require an investment of $200,000.The desired return on investment is 15%.The target cost per crepe maker is closest to:

(Multiple Choice)

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Question 66

Dieckman Company makes a product with the following costs: The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 71,000 units per year. The company has invested $360,000 in this product and expects a return on investment of 13%. Direct labor is a variable cost in this company. -If every 10% increase in price leads to a 12% decrease in quantity sold,the profit-maximizing price is closest to:

(Multiple Choice)

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Question 67

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Holding all other things constant,an increase in variable selling costs will affect:

Holding all other things constant,an increase in variable production costs will affect:

If a company sells a product for less than its budgeted unit product cost under absorption costing,then the company will lose money.

Managerial Accounting and Cost Concepts

Job-Order Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Activity-Based Costing: a Tool to Aid Decision Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Financial Statement Analysis

Least-Squares Regression Computations

Appendix B: Cost of Quality

The Predetermined Overhead Rate and Capacity

Further Classification of Labor Costs

Fifo Method

Service Department Allocations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to Determine Product Costs for External Reports

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by Operating Activities

Profitability Analysis

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