Exam 20: Pricing and Product Mix Decisions

The Houston Company manufactures office equipment. They are ready to introduce a new line of desktop copiers. The following data concerns the copiers: If the company uses cost-plus pricing based on total variable cost, what price must the company charge when the mark-up percentage is 150 per cent?

The Houston Company manufactures office equipment. They are ready to introduce a new line of desktop copiers. The following data concerns the copiers: If the company uses cost-plus pricing based on variable manufacturing cost, what price must the company charge when the mark-up percentage is 200 per cent?

Which of the following statements regarding product cost distortion and product pricing is/are true?

If the average invested capital is $300 000 and the target return on investment is 20 per cent, what is the target profit?

Which of the following is not an advantage of the variable cost pricing formula?

The material charges formula includes a charge for the costs incurred in the handling and storage of materials.

C Limited manufactures specialist medical equipment. Recruitment and training of manufacturing staff is difficult and C's operations management estimates that only 160 000 hours of labour at a rate of $50 per hour will be available in the next financial year. The following details relate to C's planned production of three products X, Y and Z for the next 12 months. To maximise profits the products C should manufacture are:

Gossip Goose (GG) is a magazine renowned for their reporting of unverifiable entertainment news. Dee Hassaloff is the marketing director of GG. Recently, Hassaloff decided to lower the price of GG to $2 in order to drive out some of the smaller competitors. Hassaloff's behaviour is best described as an example of:

Silco Pty Ltd manufactures various lines of computer equipment. They are planning to introduce a line of laptop computers in January 2008. Current plans call for the production and sale of 1000 computers with estimated production costs as follows. The average amount of capital invested in the laptop computer line is $900 000 and Silco's target return on investment for the line is 18 per cent. What price must Silco charge if the company uses cost-plus pricing based on full cost?

Which of the following statements about competitive bidding is/are true? i. The higher the price that is bid, the greater the profit, if the firm gets the contract. ii. Bidding a higher price increases the probability of obtaining the contract. iii. A company bidding low enough to ensure the acceptance of a contract may have bid too low to make an acceptable profit on the job.

The marginal revenue─marginal cost paradigm, is valid for all forms of economic market including the oligopolistic market.

The Mixed-Up Floor Company Ltd makes two products, carpet polish and floor deodoriser. Operating information from the previous year is: Fixed costs of $20 000 per year are presently allocated evenly between both products. If the product mix were to change, total fixed costs would remain the same. Calculate the contribution margin per machine hour for floor deodoriser.

Tots N Style Pty Ltd has the following data concerning a decorator playpen it manufactures: If the company uses cost-plus pricing based on full cost, determine the mark-up percentage used by the company to obtain a price of $105.

The Mixed-Up Floor Co. Ltd makes two products, carpet polish and floor deodoriser. Operating information from the previous year is as follows. Fixed costs of $20 000 per year are presently allocated evenly between both products. If the product mix were to change, total fixed costs would remain the same. Assuming everything produced for either product can be sold, how many units of each product should be produced and sold if machine hours are limited to 10 000?

Town and Country Auto Repair uses time and material pricing. The Body Shop has the following cost data. Determine the amount needed to be added to each dollar of material cost to obtain the material charge.

Silco Pty Ltd manufactures various lines of computer equipment. They are planning to introduce a line of laptop computers in January 2008. Current plans call for the production and sale of 1000 computers with estimated production costs as follows. The average amount of capital invested in the laptop computer line is $900 000 and Silco's target return on investment for the line is 18 per cent. What is the mark-up percentage if the company uses cost-plus pricing based on full cost?

Silco Pty Ltd manufactures various lines of computer equipment. They are planning to introduce a line of laptop computers in January 2008. Current plans call for the production and sale of 1000 computers with estimated production costs as follows. The average amount of capital invested in the laptop computer line is $900 000 and Silco's target return on investment for the line is 18 per cent. If Silco uses cost-plus pricing based on absorption cost, determine the mark-up percentage the company must use.

The curve that shows the relationship between sales price and quantity sold is called the:

An approach to pricing in which two charges are determined, one charge for labour used on the job and another charge for the materials used on the job, is called:

Which of the following statements about competitive bidding is/are true?