Exam 18: Pricing and Profitability Analysis

The difference between the absorption costing approach and the variable costing approach to measuring profit lies in the treatment of:

The relationship between supply and demand helps set pricing.

The following information pertains to Fondueland Corporation: Beginning inventory 0 units Ending inventory 5,000 units Direct labor per unit \ 20 Direct materials per unit 16 Variable overhead per unit 4 Fixed overhead per unit 10 Variable selling costs per 12 unit Fixed selling costs per 16 unit What is the value of ending inventory using the variable costing method?

Lorillard Corporation has the following information for April, May, and June 2018: April May June Units produced 12,500 12,500 12,500 Units sold 8,750 10,625 13,125 Production costs per unit (based on 12,500 units) are as follows: Direct materials \ 15 Direct labor 10 Variable factory overhead 7.50 Fixed factory overhead 5 Variable selling and admin. expenses 12.50 Fixed selling and admin. expenses 5 There were no beginning inventories for April 2018, and all units were sold for $50. Costs are stable over the three months. What is the June ending inventory cost for Lorillard Corporation using the variable costing method?

The percent change in quantity demanded for a given percent change in price is called price __________ .

Consolidated Corporation had the following information: Revenues \ 250,000 Cost of goods sold: Direct materials \ 50,000 Direct labor 37,500 Overhead 62,500 150,000 Gross profit \ 100,000 Selling and administrative expenses 37,500 Operating income \ 62,500 What would be the price for a product that has a cost of $500, assuming that the markup is based on cost of goods sold?

Deep Pit Mining mines three products. Gold ore sells for $1,000 per ton, variable costs are $600 per ton, and fixed mining costs are $250,000. The segment margin for 2018 was $(100,000). The management of Deep Pit Mining was considering dropping the mining of gold ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. What were the sales (in tons) for 2018?

Which of the following is a FALSE statement about target costing?

The market share variance is calculated by

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's total sales variance is

Which of the following is a limitation of profit measurement of a firm?

Unlike absorption costing, variable costing only assigns unit-level manufacturing costs to a product.

The difference between actual volume sold and expected volume sold multiplied by expected price is called the:

The sum of the change in units for each product multiplied by the difference between the budgeted contribution margin and the budgeted average unit contribution margin is called the:

The variable costing income statement for Vamonos Company for 2018 is as follows: Sales ( 5,000 units) \1 00,000 Variable expenses: Cost of goods sold \ 30,000 Selling (10\% of sales) 10,000 40,000 Contribution margin \6 0,000 Fixed expenses: Manufacturing overhead \ 24,000 Administrative 14,400 38,400 Operating income \ 21,600 $\text { Selected data for } 2018 \text { concerning the operations of the company are as follows: }$ Beginning inventory -0 - units Units produced 8,000 units Minufacturing costs: Direct labor \ 3.00 per unit Direct materials 1.60 per unit Variable overhead 1.40 per unit Required: Prepare an absorption costing income statement for 2018.

The Robinson-Patman Act allows price discrimination under which of the following circumstances?

Boysenberry Corp. has the following information for the months of January, February, and March of the current year: January February March Units produced 10,000 10,000 10,000 Units sold 9,500 9,400 9,800 Production costs per unit (based on 10,000 units) are as follows: Direct materials \ 20.00 Direct labor 15.00 Variable factory overhead 8.00 Fixed factory overhead 4.00 Variable selling and admin. expenses 10.50 Fixed selling and admin. expenses 5.75 There was no beginning inventory in the month of January, and all units were sold for $75. Costs were stable over the three months. Calculate Boysenberry's ending inventory cost for February using the absorption costing method.

A successful firm

The charging of different prices to different customers for essentially the same product is called:

The practice of setting prices below cost for the purpose of injuring competitors and eliminating competition is called: