Answer the following questions using the information below: Rockhampton Manufacturing is approached by a Brazilian customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers. Rockhampton Manufacturing has a policy of adding a 10% mark-up to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: $\begin{array}{lr} \text {Variable costs:}\\ \text { Direct materials } & \$ 30 \\ \text { Direct labour } & 10 \\ \text { Manufacturing overhead } & 15 \\ \text { Marketing costs } & 5\\ \text { Fixed costs: }\\ \quad \text { Manufacturing overhead } & 100 \\ \quad \text { Marketing costs } & \underline{20} \\ \text { Total costs } & 180 \\ \text { Mark-up }(10 \%) & 18 \\ \text { Estimated selling price } & \underline{ \$ 198} \end{array}$ -If Stephen Fleming wanted a long-term commitment for supplying this product,what price would MOST likely be quoted to him?

A) $1400 B) $1000 C) $1290 D) $1075 A) $1400 B) $1000 C) $1290 D) $1075

Answer the following questions using the information below: LeBlanc Lighting manufactures table lamps and is considering raising the price by $15 a unit for the coming year.With a $15 price increase,demand is expected to fall by 2500 units. \[\begin{array} { l r r } & \text { Current } & \text { Projected } \\ \text { Demand }& 20000 \text { urits } & 17500 \text { urits } \\ \text { Selling price }& \$ 150 & \$ 165 \\ \text { Variable costs per unit } & \$ 100 & \$ 100 \end{array}\] -The demand for this product is:

A) elastic. B) greatly inelastic. C) slightly inelastic. D) indeterminable. A) elastic. B) greatly inelastic. C) slightly inelastic. D) indeterminable.

Answer the following questions using the information below: Rockhampton Manufacturing is approached by a Brazilian customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers. Rockhampton Manufacturing has a policy of adding a 10% mark-up to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: $\begin{array}{lr} \text {Variable costs:}\\ \text { Direct materials } & \$ 30 \\ \text { Direct labour } & 10 \\ \text { Manufacturing overhead } & 15 \\ \text { Marketing costs } & 5\\ \text { Fixed costs: }\\ \quad \text { Manufacturing overhead } & 100 \\ \quad \text { Marketing costs } & \underline{20} \\ \text { Total costs } & 180 \\ \text { Mark-up }(10 \%) & 18 \\ \text { Estimated selling price } & \underline{ \$ 198} \end{array}$ -If the Brazilian customer wanted a long-term commitment for supplying this product,what price would MOST likely be quoted?

A) $180.00 B) $217.80 C) $198.00 D) $66.00 A) $180.00 B) $217.80 C) $198.00 D) $66.00

Exam 9: Pricing and Customer Profitability

Action Toys has a new video game for the upcoming holiday season.What will be the target cost per unit for the new game if the selling price per unit is $60,and the firm wants to earn a target operating profit of 12% of sales?

(Multiple Choice)

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Question 101

The 'target rate of return on investment' is another way of referring to the mark-up percentage.

(True/False)

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Question 102

Answer the following questions using the information below: Gold Coast Freshair (GCF)manufactures single room-sized air conditioners.The cost accounting system estimates manufacturing costs to be $120 per air conditioner,consisting of 75% variable costs and 25% fixed costs.The company has surplus capacity available.It is GCF's policy to add a 40% mark-up to full costs. -GCF is invited to bid on a one-time-only special order to supply 50 air conditioners.What is the lowest price GCF should bid on this special order?

(Multiple Choice)

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Question 103

A product's mark-up percentage needs to cover operating profits when the cost base is:

(Multiple Choice)

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Question 104

Companies that only record the invoice price can usually track the magnitude of price discounting.

(True/False)

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Question 105

For long-run pricing decisions,what is the advantage of using stable prices?

(Multiple Choice)

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Question 106

Managers who want to calculate the full costs of serving customers must allocate all corporate,division and distribution-channel costs to customers.

(True/False)

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Question 107

An incremental product cost is generally a fixed cost.

(True/False)

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Question 108

Organisation-sustaining costs should be allocated to:

(Multiple Choice)

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Question 109

To determine whether or not a product,customer,program or department is profitable,managers must ________ costs.

(Multiple Choice)

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Question 110

Allocating division-sustaining costs to distribution channels exaggerates the potential cost savings from discontinuing a distribution channel.

(True/False)

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(80)

Question 111

Answer the following questions using the information below: Rockhampton Manufacturing is approached by a Brazilian customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers. Rockhampton Manufacturing has a policy of adding a 10% mark-up to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials \ 30 Direct labour 10 Manufacturing overhead 15 Marketing costs 5 Fixed costs: Manufacturing overhead 100 Marketing costs Total costs 180 Mark-up (10\%) 18 Estimated selling price -If Stephen Fleming wanted a long-term commitment for supplying this product,what price would MOST likely be quoted to him?

(Multiple Choice)

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(85)

Question 112

For long-run pricing decisions,which of the following costs of a product informs managers of the minimum cost they need to recover to continue in business?

(Multiple Choice)

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Question 113

Answer the following questions using the information below: LeBlanc Lighting manufactures table lamps and is considering raising the price by $15 a unit for the coming year.With a $15 price increase,demand is expected to fall by 2500 units. Current Projected Demand 20000 urits 17500 urits Selling price \ 150 \ 165 Variable costs per unit \ 100 \ 100 -The demand for this product is:

(Multiple Choice)

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Question 114

What is the general form of the cost-plus pricing approach?

(Multiple Choice)

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Question 115

In general,distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

(True/False)

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Question 116

Answer the following questions using the information below: Rockhampton Manufacturing is approached by a Brazilian customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers. Rockhampton Manufacturing has a policy of adding a 10% mark-up to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials \ 30 Direct labour 10 Manufacturing overhead 15 Marketing costs 5 Fixed costs: Manufacturing overhead 100 Marketing costs Total costs 180 Mark-up (10\%) 18 Estimated selling price -If the Brazilian customer wanted a long-term commitment for supplying this product,what price would MOST likely be quoted?

(Multiple Choice)

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(79)

Question 117

________ are a function of many factors,such as the volume of product purchased (higher-volume customers receive higher discounts)and the desire to sell to a customer who might help promote sales to other customers.

(Multiple Choice)

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Question 118

Answer the following questions using the information below: Laver Shavers manufactures electric shavers and is considering decreasing the price by $2.50 a unit for the coming year.With a $2.50 price decrease,the unit demand is expected to increase by 25%,and a high volume materials discount is expected to decrease the variable costs per unit by $1 per unit. Currently Projected Demand 10000 units 12500 units Selling price \ 51 \ 48.50 Variable costs per unit \ 45 \ 44 -The demand for this product is:

(Multiple Choice)

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(85)

Question 119

Answer the following questions using the information below: LeBlanc Lighting manufactures table lamps and is considering raising the price by $15 a unit for the coming year.With a $15 price increase,demand is expected to fall by 2500 units. Current Projected Demand 20000 urits 17500 urits Selling price \ 150 \ 165 Variable costs per unit \ 100 \ 100 -When demand is elastic,an increase in price will lead to an increase in profits.

(True/False)

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(69)

Question 120

Action Toys has a new video game for the upcoming holiday season.What will be the target cost per unit for the new game if the selling price per unit is $60,and the firm wants to earn a target operating profit of 12% of sales?

The 'target rate of return on investment' is another way of referring to the mark-up percentage.

A product's mark-up percentage needs to cover operating profits when the cost base is:

Companies that only record the invoice price can usually track the magnitude of price discounting.

For long-run pricing decisions,what is the advantage of using stable prices?

Managers who want to calculate the full costs of serving customers must allocate all corporate,division and distribution-channel costs to customers.

An incremental product cost is generally a fixed cost.

Organisation-sustaining costs should be allocated to:

To determine whether or not a product,customer,program or department is profitable,managers must ________ costs.

Allocating division-sustaining costs to distribution channels exaggerates the potential cost savings from discontinuing a distribution channel.

For long-run pricing decisions,which of the following costs of a product informs managers of the minimum cost they need to recover to continue in business?

What is the general form of the cost-plus pricing approach?

In general,distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

________ are a function of many factors,such as the volume of product purchased (higher-volume customers receive higher discounts)and the desire to sell to a customer who might help promote sales to other customers.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

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