Exam 20: Pricing and Product Mix Decisions

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? A. 10 000 units 0 units B. 5 000 units 10 000 units C. 8 000 units 4000 units D. 0 units 20 000 units

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

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

If the target profit is $60 000 for an annual volume of 480 units,the total annual fixed costs are $168 000 and the total variable cost per unit is $450,then what is the mark-up percentage on full cost?

Which of the following statements is not correct? Linear programming is a technique designed to recognise specifically that:

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

When pricing new products,one strategy that can be used is price skimming where the initial product price is set low and in doing this management hope the product will be widely accepted in the long term.

Under competitive bidding when a company has no excess capacity,the bid price would normally include:

Which of the following statements regarding absorption cost pricing formulas is/are true? i.Absorption cost pricing formulas provide a justifiable price that tends to be perceived as equitable by all parties ii.Since absorption cost information is necessary for external reporting,it is cost effective to use it for pricing. iii.Absorption cost-plus pricing formulas generally will result in a higher mark-up percentage than variable manufacturing cost formulas.

Avocado Ltd produces small electronic components for kitchen appliances.This year it expects to produce 10 000 units of component X.The variable manufacturing cost of component X represents 50% of its total costs.The target profit is $2 per unit.Using the cost-plus pricing approach based on total costs,the selling price per unit of component X is $20.If Avocado Ltd decides to change its cost-plus pricing approach to base the mark up percentage on variable manufacturing costs,the selling price for each unit of component X will be:

Town and Country Auto Repair uses time and material pricing.The Body Shop has the following cost data.Determine the time charge per hour.

In the economic profit-maximising pricing model,how do the marginal revenue and marginal cost curves generally behave? Marginal revenue Marginal cost

In linear programming,a constraint represents:

The pricing strategy that results in greater initial sales volume but lower unit profits is called:

The demand curve is also called the:

How are the time charges calculated?

The Trade Practices Act 1974 (Cwlth)is legislation that:

Town and Country Auto Repair uses time and material pricing.The Body Shop has the following cost data.If a particular job takes 10 hours in labour and $500 in materials,determine the price charged for the job.

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

One of the advantages of activity-based costing (ABC)over traditional methods of overhead allocation,when combined with cost-based pricing,is that ABC avoids the problem of: