Question 1

The value-based pricing approach is to set a cost primarily based on competitors' response after the launch and delivery of the new product or service.

Accepted Answer

A) True 
 B)False

Question 2

Trepan Corporation is contemplating the introduction of a new product.The company has gathered the following information concerning the product:
The company uses the absorption costing approach to cost-plus pricing as described in the text.
Required:
a.Compute the markup on absorption cost.
b.Compute the selling price.
c.If the price computed in "b" above is charged,and costs turn out as projected,can the company be assured that no loss will be sustained on the new product? Explain.

Accepted Answer

@#IMG-DLM& a.Markup percentage on absorption cost

Question 3

If the unit sales for one product are more sensitive to price increases than another product,then its markup over variable cost should be less than for the other product if the company wants to maximize profit.

Accepted Answer

A) True 
 B)False

Question 4

Clulow Corporation recently changed the selling price of one of its products.Data concerning sales for comparable periods before and after the price change are presented below.
The product's variable cost is $10.50 per unit.
 $$\begin{array}{l}
\text { Selling Price}&\text {  Unit Sales }\
\$ 34.00 & 7,800 \
\$ 31.00 & 10,010
\end{array}$$
-The product's price elasticity of demand as defined in the text is closest to:

Accepted Answer

A) -3.19 
B) -2.02 
C) -2.70 
D) -4.13 
A) -3.19 
B) -2.02 
C) -2.70 
D) -4.13

The value-based pricing approach is to set a cost primarily based on competitors' response after the launch and delivery of the new product or service.

If the unit sales for one product are more sensitive to price increases than another product,then its markup over variable cost should be less than for the other product if the company wants to maximize profit.

Absorption Costing and Variable Costing

Statement of Cash Flows

Further Classification of Labor Costs

Cost of Quality

Least-Squares Regression Computations

Absorption Costing and Variable Costing

Abc Action Analysis

Use Activity-Based Costing Technique to Compute Product Costs for External Reports

Fifo Method

Compute and Interpret the Fixed Overhead Variances

Journal Entries to Record Variances

Transfer Pricing

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

Profitability Analysis

Filters

Exam 15: Pricing Products and Services

The value-based pricing approach is to set a cost primarily based on competitors' response after the launch and delivery of the new product or service.

If the unit sales for one product are more sensitive to price increases than another product,then its markup over variable cost should be less than for the other product if the company wants to maximize profit.

Absorption Costing and Variable Costing

Statement of Cash Flows

Further Classification of Labor Costs

Cost of Quality

Least-Squares Regression Computations

Absorption Costing and Variable Costing

Abc Action Analysis

Use Activity-Based Costing Technique to Compute Product Costs for External Reports

Fifo Method

Compute and Interpret the Fixed Overhead Variances

Journal Entries to Record Variances

Transfer Pricing

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

Profitability Analysis

Filters