Exam 5: Relevant Information and Decision Making With a Focus on Pricing Decisions

The expected maximum sales price for a good or service depends on the costs associated with that good or service.

In a special order decision, fixed costs that do not differ between two alternatives are _____.

The total of all manufacturing costs plus the total of all selling and administrative costs is equal to _____.

Federer Industries budgeted the following costs for the production of its only product, tennis balls, for the next fiscal year: Materials \ 35,000 Labor 25,000 Overhead: Variable 30,000 Fixed 15,000 Selling and administrative: Variable 7,500 Fixed Total costs \ 125,000 Federer Industries has a target profit of $50,000.The average target markup for setting prices as a percentage of total variable costs would be _____.

Target costing sets prices by computing an average cost then adding a desired markup.

The total of all manufacturing costs plus the total of all selling and administrative costs

As long as marginal cost is less than the sales price, additional production and sales are profitable.

According to courts in the United States, pricing is predatory only if companies set prices below their average total cost and actually lose money in order to drive their competitors out of business.

Nebraska Company produces and sells 20,000 units at $20 per unit.Nebraska Company's product cost is calculated as follows: Variable-unit-based costs \ 8 per unit Fixed costs \ 2 per unit Set-up costs \ 3 per unit \ 13 per unit A total of 500 set-ups at a cost of $120 per set-up are required to produce the 20,000 units.Nebraska Company has received a special order to sell 5,000 units at $10 per unit.Nebraska Company has excess capacity available, but these 5,000 would require 60 set-ups.If Nebraska Company accepts the special order, Nebraska Company's net income will _____.

Overcapacity in some countries often causes aggressive pricing policies, particularly for a company's imported goods.

_____ is the predicted future costs and revenues that will differ among alternative courses of action.

Companies use cost-plus pricing for products where management actions can influence the market price.

Discriminatory pricing is the act of charging different prices to different customers for the same product or service.

In imperfect competition _____.

Couch Company can produce either product A or product B.If Couch Company produces product A, expected direct material cost would be $24,000.If Couch Company produces product B, expected direct material cost would be $24,000.In choosing between these alternatives, the $24,000 direct material cost is _____.

In perfect competition, the profit?maximizing volume is the quantity at which _____.

Chocolate Manufacturing is considering producing a new product.Chocolate Manufacturing expects to sell 15,000 units over the life of the product.Variable production costs and variable selling costs are estimated at $42 and $16 per unit, respectively.Annual fixed production and fixed selling costs are estimated at $15,000 and $5,000, respectively.Research and development costs are estimated at $184,000.___________ is the total variable cost over the product life cycle.

Nevada Company provided the following information regarding its only product--skateboards. Direct materials used \ 200,000 Direct labor 80,000 Fixed overhead 180,000 Fixed selling and administrative costs 150,000 Variable overhead 30,000 Variable selling and administrative 60,000 Selling unit price 127 Units produced and sold 10,000 _____ is the manufacturing cost per unit if the contribution approach is used.

The predicted future costs and revenues that will differ among alternative courses of action

Hubba Company has a current production capacity level of 200,000 units per month.At this level of production, variable costs are $0.90 per unit and fixed costs are $0.50 per unit.Current monthly sales are 164,500 units.Bubba Company has contacted Hubba Company about purchasing 20,000 units at $2.00 each.Current sales would not be affected by the special order and no additional fixed costs would be incurred on the special order.If Hubba Company decides to accept the special order, Hubba Company's costs will increase by _____.