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

With increased global competition in many industries, companies are increasingly limited in influencing market prices.

If a small price increase causes large volume declines, demand is highly inelastic.

Arkansas Corporation provided the following information regarding its only product--tables: Selling price per unit \ 65 Direct materials used 150,000 Direct labor 225,000 Variable factory overhead 140,000 Variable selling and administrative expenses 60,000 Fixed factory overhead 370,000 Fixed selling and administrative expenses 30,000 Units produced and sold 20,000 Assuming there is excess capacity, the effect of accepting a special order for 1,000 units at a price of $40.00 per table is that net income would _____.

In managerial accounting, marginal cost is essentially the variable cost.

Santa Company provided the following information regarding its only product--skateboards. Direct materials used \ 450,000 Direct labor 170,000 Fixed overhead 80,000 Variable overhead 20,000 Variable selling and administrative 40,000 Units produced and sold 40,000 The manufacturing cost per unit by using the absorption approach is _____.

A costing approach that considers all factory overhead as product cost

Which of the following is the key question in decision making?

The total-manufacturing-cost and full-cost approaches often fail to highlight different cost behavior patterns.

A method of internal reporting that emphasizes the distinction between variable and fixed costs

In perfect competition, the marginal revenue curve is a vertical line equal to the price per unit at all volumes of sales.

In a decision-making process, the accountant's primary role is _____.

The additional revenue resulting from the sale of an additional unit

Sue Me Manufacturing is considering producing a new product.Sue Me Manufacturing expects to sell 2,000 units over the product's expected 4-year life.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.If the product sells for $200 per unit, the expected profit over the entire product life cycle is _____.

In considering whether to produce a single product, the associated direct materials and direct labor costs would probably be an) _____.

New Mexico Company provided the following information regarding its only product--skateboards. Direct materials used \ 200,000 Direct labor 80,000 Fixed overhead 100,000 Fixed selling and administrative costs 150,000 Variable overhead 20,000 Variable selling and administrative 60,000 Selling unit price 80 Units produced and sold 10,000 _____ is the contribution margin if the contribution approach is used.

Colorado Company provided the following information regarding its only product--ice skates. Direct materials used \ 200,000 Direct labor 80,000 Fixed overhead 100,000 Fixed selling and administrative costs 220,000 Variable overhead 20,000 Variable selling and administrative 75,000 Selling unit price 84 Units produced and sold 10,000 _____ is the manufacturing cost per unit if the absorption approach is used.

A target cost is set after creating a product.

The effect of price changes on sales volume

Marginal cost is the additional cost resulting from producing and selling one additional unit.

Total manufacturing costs or full-cost pricing is more widely used in practice than the contribution margin approach to pricing.