Answer the following questions using the information below: Ozfone manufactures high-tech mobile phones.Ozfone has a policy of adding a 30% mark-up to full costs and currently has excess capacity.The following information pertains to the company's normal operations per month: \[\begin{array} { l r l } \text { Output units } & 20000 \text { phones } \\ \text { Machine-hours } & 8000 \text { hours } \\ \text { Direct manufacturing labour-hours } & 5000 \text { hours } \\ & \\ \text { Direct materials per unit } & \$ 25 \\ \text { Direct manufacturing labour per hour } & \$ 20 \\ \text { Variable manufacturing overhead costs } & \$ 175000 \\ \text { Fixed manufacturing overhead costs } & \$ 425000 \\ \text { Product and process design costs } & \$ 400000 \\ \text { Marketing and distribution costs } & \$ 475000 \end{array}\] -Ozfone is approached by an overseas customer to fulfil a one-time-only special order for 1000 units.All cost relationships remain the same except for a one-time set-up charge of $15 000.No additional design,marketing or distribution costs will be incurred.What is the minimum acceptable bid per unit on this one-time-only special order?

A) $92.50 B) $180.00 C) $53.75 D) $234.00 A) $92.50 B) $180.00 C) $53.75 D) $234.00

Answer the following questions using the information below: Alice Water Coolers is approached by Mrs Hu Qi,a new customer,to fulfil a large one-time-only special order for a product similar to one offered to regular customers.Alice Water Coolers has excess capacity.The following per unit data apply for sales to regular customers: \[\begin{array} { l r } \text { Direct materials } & \$ 250 \\ \text { Direct manufacturing labour } & 80 \\ \text { Variable manufacturing support } & 50 \\ \text { Fixed manufacturing support } & \underline { 100 } \\ { \text { Total manufacturing costs } } & 480 \\ \text { Mark-up (30\%) } & \underline { 144 } \\ \text { Estimated selling price } & \underline {\$ 624} \end{array}\] -For Alice Water Coolers,what is the minimum acceptable price of this one-time-only special order?

A) $380 B) $330 C) $624 D) $480 A) $380 B) $330 C) $624 D) $480

Exam 9: Pricing and Customer Profitability

Explain the differences between short-run pricing decisions and long-run pricing decisions. _ _

(Essay)

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(86)

Question 121

What type of costs are not relevant to a decision as to whether or not to close a business-sales distribution channel?

(Multiple Choice)

4.7/5

(69)

Question 122

What advice would you give a company to avoid the appearance of predatory pricing? _ _

(Essay)

4.8/5

(78)

Question 123

Companies that produce high quality products do not have to pay attention to the actions of their competitors.

(True/False)

4.7/5

(76)

Question 124

Customers who provide ideas about new products or ways to improve existing products are especially valuable.

(True/False)

4.8/5

(78)

Question 125

Customers with established reputations,also called 'reference customers',help generate sales from other customers through product endorsements.

(True/False)

4.9/5

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Question 126

An activity-based costing system may focus on customers rather than products.

(True/False)

4.7/5

(81)

Question 127

What actions might be taken with an unprofitable customer? _ _

(Essay)

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Question 128

Managers use the customer-profitability profiles to identify the small set of customers who deserve the highest service and priority.

(True/False)

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(74)

Question 129

Answer the following questions using the information below: Ozfone manufactures high-tech mobile phones.Ozfone has a policy of adding a 30% mark-up to full costs and currently has excess capacity.The following information pertains to the company's normal operations per month: Output units 20000 phones Machine-hours 8000 hours Direct manufacturing labour-hours 5000 hours Direct materials per unit \ 25 Direct manufacturing labour per hour \ 20 Variable manufacturing overhead costs \ 175000 Fixed manufacturing overhead costs \ 425000 Product and process design costs \ 400000 Marketing and distribution costs \ 475000 -Ozfone is approached by an overseas customer to fulfil a one-time-only special order for 1000 units.All cost relationships remain the same except for a one-time set-up charge of $15 000.No additional design,marketing or distribution costs will be incurred.What is the minimum acceptable bid per unit on this one-time-only special order?

(Multiple Choice)

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(73)

Question 130

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 -Companies that operate in non-competitive environments offering products or services that differ from each other use a market-based approach when making their long-run pricing decisions.

(True/False)

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Question 131

A hotel in Fiji experiences peak periods and slower times.How should prices be adjusted during peak periods? How should prices be adjusted during slow times? Why? _ _

(Essay)

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Question 132

Some managers and management accountants advocate fully allocating all costs to distribution channels and to customers because all costs are incurred to support the sales of products to customers.

(True/False)

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Question 133

Allocating ________ costs to distribution channels motivates the managers of the distribution channels to monitor costs incurred in the division.

(Multiple Choice)

4.8/5

(79)

Question 134

Customers with established reputations,also called ________ customers,help generate sales from other customers through product endorsements.

(Multiple Choice)

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Question 135

Answer the following questions using the information below: Alice Water Coolers is approached by Mrs Hu Qi,a new customer,to fulfil a large one-time-only special order for a product similar to one offered to regular customers.Alice Water Coolers has excess capacity.The following per unit data apply for sales to regular customers: Direct materials \ 250 Direct manufacturing labour 80 Variable manufacturing support 50 Fixed manufacturing support Total manufacturing costs 480 Mark-up (30\%) Estimated selling price -For Alice Water Coolers,what is the minimum acceptable price of this one-time-only special order?

(Multiple Choice)

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(86)

Question 136

Sellers estimate a target price for a product or service that potential customers will be willing to pay based on their understanding of customers' perceived value of its outputs and how competitors will price competing products or services.

(True/False)

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(85)

Question 137

Price discounts should never be viewed as:

(Multiple Choice)

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(81)

Question 138

Managers do not believe that basing prices on the full cost of the product promotes price stability because it limits the ability and temptations of salespeople to cut prices.

(True/False)

4.7/5

(68)

Question 139

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 -Would you recommend the $2 price decrease?

(Multiple Choice)

4.8/5

(84)

Question 140

Explain the differences between short-run pricing decisions and long-run pricing decisions. _ _

What type of costs are not relevant to a decision as to whether or not to close a business-sales distribution channel?

What advice would you give a company to avoid the appearance of predatory pricing? _ _

Companies that produce high quality products do not have to pay attention to the actions of their competitors.

Customers who provide ideas about new products or ways to improve existing products are especially valuable.

Customers with established reputations,also called 'reference customers',help generate sales from other customers through product endorsements.

An activity-based costing system may focus on customers rather than products.

What actions might be taken with an unprofitable customer? _ _

Managers use the customer-profitability profiles to identify the small set of customers who deserve the highest service and priority.

A hotel in Fiji experiences peak periods and slower times.How should prices be adjusted during peak periods? How should prices be adjusted during slow times? Why? _ _

Some managers and management accountants advocate fully allocating all costs to distribution channels and to customers because all costs are incurred to support the sales of products to customers.

Allocating ________ costs to distribution channels motivates the managers of the distribution channels to monitor costs incurred in the division.

Customers with established reputations,also called ________ customers,help generate sales from other customers through product endorsements.

Sellers estimate a target price for a product or service that potential customers will be willing to pay based on their understanding of customers' perceived value of its outputs and how competitors will price competing products or services.

Price discounts should never be viewed as:

Managers do not believe that basing prices on the full cost of the product promotes price stability because it limits the ability and temptations of salespeople to cut prices.

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

Filters

Exam 9: Pricing and Customer Profitability

Explain the differences between short-run pricing decisions and long-run pricing decisions. _____________________________________________________________________________________________ _____________________________________________________________________________________________

What type of costs are not relevant to a decision as to whether or not to close a business-sales distribution channel?

What advice would you give a company to avoid the appearance of predatory pricing? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Companies that produce high quality products do not have to pay attention to the actions of their competitors.

Customers who provide ideas about new products or ways to improve existing products are especially valuable.

Customers with established reputations,also called 'reference customers',help generate sales from other customers through product endorsements.

An activity-based costing system may focus on customers rather than products.

What actions might be taken with an unprofitable customer? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Managers use the customer-profitability profiles to identify the small set of customers who deserve the highest service and priority.

Some managers and management accountants advocate fully allocating all costs to distribution channels and to customers because all costs are incurred to support the sales of products to customers.

Allocating ________ costs to distribution channels motivates the managers of the distribution channels to monitor costs incurred in the division.

Customers with established reputations,also called ________ customers,help generate sales from other customers through product endorsements.

Sellers estimate a target price for a product or service that potential customers will be willing to pay based on their understanding of customers' perceived value of its outputs and how competitors will price competing products or services.

Price discounts should never be viewed as:

Managers do not believe that basing prices on the full cost of the product promotes price stability because it limits the ability and temptations of salespeople to cut prices.

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

Filters

Explain the differences between short-run pricing decisions and long-run pricing decisions. _ _

What advice would you give a company to avoid the appearance of predatory pricing? _ _

What actions might be taken with an unprofitable customer? _ _