Exam 18: Pricing and Profitability Analysis

Consolidated Corporation had the following information: 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?

Which of the following is NOT a limitation of profit management?

Custom Choppers, Inc. produces two types of motorcycles, a standard model which sells for $5,000, and a customized model which sells for $10,000. Budgeted sales for the year are 300 standard models and 100 customized models. Variable expenses are $1,500 for the standard model and $3,500 for the customized model. Actual sales were 500 standard models at $6,000 and 150 customized models at $12,000. Calculate: a. Contribution Margin Variance b. Budgeted Average Unit Contribution Margin c. Contribution Margin Volume Variance Indicate whether Favorable (F) or Unfavorable (U)

The pricing of a new product at a low initial price to build market share quickly is called .

Figure 18-1 The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Bayview sold 1,000,000 cases last year to the following types of customers: The drugstore chains have special handling costs of $0.20 a case and increased administrative assistance costing $45,000 per year. The gas station chains require special marketing promotions that cost $50,000. Sales commissions of 10% are paid. The supermarket chains order electronically through EDI which costs $25,000 annually. Bayview is responsible for shipping costs, which totaled $0.50 a case and special labels costing $0.02 per bottle Local pharmacies have special handling costs of $0.10 per case and sales commissions are paid to agents costing $0.25 per case. Bad debt expense averages 10% of sales. -Refer to Figure 18-1. What customer type is the most profitable ?

Octagonal Company has the following information for 2016: Selling price $150 per unit Variable production costs $40 per unit produced Variable selling and admin. expenses $16 per unit sold Fixed production costs $200,000 Fixed selling and admin. expenses $140,000 Units produced 10,000 units Units sold 8,000 units There were no beginning inventories. What is the net income for Octagonal using the absorption costing method?

The profit history of a product according to four stages is called the product .

Under absorption costing, when production is less than sales volume, the profits, using variable costing procedures, will be:

Lorillard Corporation has the following information for April, May, and June 2016: Production costs per unit (based on 12,500 units) are as follows: There were no beginning inventories for April 2016, and all units were sold for $50. Costs are stable over the three Months. What is the May ending inventory cost for Lorillard Corporation using the variable costing method?

The budgeted average unit contribution margin is the budgeted total contribution margin divided by the:

Lilah Fabulous operates a catering company. Lilah provides food and servers for parties. She also rents tables, chairs, dinnerware, glassware, and linens. Jeff and Jessica Mantooth contacted Lilah about catering for their daughter's wedding. They have requested an open bar, hors d'oeuvres (enough for 300 people), a large wedding cake, and forty tables with linens, dinnerware, and glassware. Lilah put together the following bid: Suppose that the Mantooths blanch when they see the bid. Mr. Mantooth suggests that they had hoped to spend no more than $3,750 or so on the party. How could Lilah work with the Holmses to achieve a target cost of that amount?

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

The following information pertains to Guillotine Corporation: What is the value of the ending inventory using the variable costing method?

Many products have a predictable profit or product life cycle. Describe the product life cycle from the marketing perspective. In addition, graph profit versus the different phases. Finally, discuss the impact of the product life cycle on products, learning effects, setups, purchasing, and marketing expenses.

Many companies base prices on cost while other companies use target-costing strategies.

Absorption costing is to gross margin as variable costing is to:

The following information pertains to three different products being sold by Modular Company: Which products have an inelastic demand curve?

Which of the following statements is FALSE?

When monthly production volume is constant and sales volume is less than production, net income determined with variable costing procedures will

The Furthur Phish Company has recorded the following data for three of their products: a. Determine the price elasticity of demand for each of the products. b. Which products have an elastic demand? Inelastic demand?