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The management of Volare Company expects that every 9% increase in the selling price of one of the company's products will result in a 10% decrease in total unit sales of that product. The variable production cost of this product is $25.20 per unit and the variable selling and administrative cost is $9.80 per unit. The product's profit-maximizing price, according to the formula in the text, is closest to: |
| | | [removed]A) | $208.40 |
| | | [removed]B) | $192.94 |
| | | [removed]C) | $41.66 |
| | | [removed]D) | $5.49 |
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The management of Tosetti Company believes that every 5% increase in the selling price of one of the company's products will result in an 8% decrease in total unit sales of that product. The product's price elasticity of demand, as defined in the text, is closest to: |
| | | [removed]A) | -2.41 |
| | | [removed]B) | -1.99 |
| | | [removed]C) | -1.71 |
| | | [removed]D) | -1.25 |
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Bodine, Inc. manufactures a product with the following costs:
The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 79,000 units per year. The company expects a return on investment of 15% on the $420,000 investment that it made in this product. The selling price based on the absorption costing approach described in the text would be closest to: |
| | | [removed]A) | $108.04 |
| | | [removed]B) | $73.90 |
| | | [removed]C) | $73.10 |
| | | [removed]D) | $47.29 |
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Marlin Company manufactures a product that has a selling price of $96 per unit. Unit costs associated with the manufacture and sale of the product based on 25,000 units manufactured and sold each year are as follows.
The company uses the absorption costing approach to cost-plus pricing described in the text. The percentage markup being used to determine the selling price for the product is: |
| | | [removed]A) | 100.0% |
| | | [removed]B) | 60.0% |
| | | [removed]C) | 40.0% |
| | | [removed]D) | 37.5% |
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Gleacher Company, a manufacturer of hair dryers, wants to introduce a smaller hair dryer designed for travel. To compete effectively, this hair dryer cannot be priced at more than $13.25. The company requires a 7.5% rate of return on investment on all new products. In order to produce and sell 80,000 of the smaller hair dryers each year, the company will need to make an investment of $800,000. The target cost per unit would be closest to: |
| | | [removed]A) | $15.50 |
| | | [removed]B) | $14.00 |
| | | [removed]C) | $12.50 |
| | | [removed]D) | $1.50 | 1 | |
Portland Corporation would like to determine the relative profitability of various jobs. The company has provided the following data for the first job analyzed. The revenue earned from job will equal $145,000 and the avoidable cost is $116,000. The amount of the constrained resource used by the job is 500 hours. The percentage of the total company profit for the period from the job is 30%. What is the profitability index for the job? | | | | [removed]A) | $58 per hour | | | | [removed]B) | $290 per hour | | | | [removed]C) | 0.20 | | | | [removed]D) | 0.30 | | | | | | | 2 | |
Merlot Corporation would like to determine the relative profitability of various jobs. The company has provided the following data for the first job analyzed. The revenue earned from job will equal $197,200, the avoidable cost is $138,040, and the incremental profit is $59,160. The amount of the constrained resource used by the job is 680 hours. What is the profitability index for the job? | | | | [removed]A) | 0.30 | | | | [removed]B) | $290 per hour | | | | [removed]C) | $203 per hour | | | | [removed]D) | $87 per hour | | | | | | | 3 | |
Palm Corporation has provided the following data concerning its two products. Product A, which has a monthly demand of 1,500 units, has a contribution margin $127.50 per unit and requires 17 grams per unit. Product B, which has a monthly demand of 7,300 units, has a contribution margin $52.00 per unit and requires 5 grams per unit. The total amount of the constrained resource available each month is 49,250 grams. What is the maximum contribution margin the company can earn per month? | | | | [removed]A) | $570,850 | | | | [removed]B) | $475,225 | | | | [removed]C) | $453,457 | | | | [removed]D) | $438,250 | | | | | | | 4 | |
The unit contribution margin of one of the products made by Scranton Company is $25.20, which was determined by subtracting the variable cost per unit of $100.90 from the selling price of $126.00. Six grams of the constrained resource are required to make one unit of product. The monthly demand for the product is 4,200 units. On a per gram basis, the profitability index for this product is closest to: | | | | [removed]A) | 0.20 | | | | [removed]B) | 0.19 | | | | [removed]C) | $5.00 | | | | [removed]D) | $4.20 | | | | | | | 5 | |
The opportunity cost of using one unit of the constrained resource in a volume trade-off decision is equal to the profitability index: | | | | [removed]A) | of the product with the greatest sales. | | | | [removed]B) | for the company's most profitable existing product. | | | | [removed]C) | for the company's least profitable product—even if none of the product is currently being made. | | | | [removed]D) | for the product whose production would be cut back if necessary. |
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putul
13 years ago
appendix_a_and_b.docx
