FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 24: Differential Analysis, Product Pricing, and Activity-Based Costing

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

When using the variable cost concept of applying the cost-plus approach to product pricing, what is included in the markup?

A) total costs plus desired profit
B) desired profit
C) total selling and administrative expenses plus desired profit
D) total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin it can earn per month?

A) $49,000
B) $70,000
C) $56,000
D) $34,000

E) B) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 23

Essay

Review LaterAdd Note

Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows:​ Fixed costs:Factory overhead$25,000Selling and administrative expenses17,000​Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500.​ (a)Determine the amount of desired profit from the production and sale of Product K. (b)Determine the total manufacturing costs and the cost amount per unit for the production of 25,000 units of Product K. (c)Determine the markup percentage for Product K. (d)Determine the selling price of Product K.​Round the markup percentage to one decimal place, and other intermediate calculations and final answer to two decimal places.

The amount of increase or decrease in cost that is expected from a particular course of action as compared with an alternative is

Using the variable cost concept, determine the markup per unit for 30,000 units using the following data:​Variable cost per unit $15Total fixed costs $90,000Desired profit $150,000Round to the nearest dollar.

Make-or-buy decisions should be made only with related parties.

Swan Company produces a product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit. Determine the markup percentage on product cost.

The differential revenue of producing Product P over Product O is $82 per pound.

When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based on ideal levels of performance.

Use this information for Dotterel Corporation to answer the questions that follow. ? Dotterel Corporation uses the variable cost concept of product pricing. Below is the cost information for the production and sale of 35,000 units of its sole product. Dotterel desires a profit equal to an 11.2% rate of return on invested assets of $350,000. ?? -The variable cost per unit for the production and sale of the company's product is

A cost that will not be affected by later decisions is termed a sunk cost.

Airflow Company sells a product in a competitive marketplace. Market analysis indicates that the product would probably sell at $28.00 per unit. Airflow management desires a profit equal to a 20% rate of return on invested assets of $1,400,000. Airflow anticipates selling 50,000 units. The current full cost per unit for the product is $25.00 per unit.​ (a) What is the amount of profit per unit?​ (b) What is the target cost per unit if Airflow meets the market dictated price and management's desired profit?

The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is

Make-or-buy options often arise when a manufacturer has excess productive capacity in the form of unused equipment, space, and labor.

Jacoby Company received an offer from an exporter for 30,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:Domestic unit sales price$21Unit manufacturing costs:Variable12Fixed5​​What is the differential revenue from the acceptance of the offer?

Delaney Company is considering replacing equipment that originally cost $600,000 and that has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation?

Match each definition that follows with the term (a-e) it defines. -Not relevant to future decisions

The total cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.

What is the differential cost from the acceptance of the offer?

Use this information for Swan Company to answer the questions that follow. Swan Company produces a product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit. -What is the activity rate for general overhead?