Diff 2 terms cost plus pricing objective 2 aacsb

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Chapter 1 / Exercise 27
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
Expert Verified
Diff: 2 Terms: cost-plus pricing Objective: 2 AACSB: Analytical skills
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Chapter 1 / Exercise 27
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
Expert Verified
Objective 12.3 1) Long-run pricing decisions: A) have a time horizon of less than one year B) include adjusting product mix in a competitive environment C) and short-run pricing decisions generally have the same relevant costs D) use prices that include a reasonable return on investment Answer: D Diff: 3 Terms: target rate of return on investment Objective: 3 AACSB: Reflective thinking 2) Long-run pricing: A) needs to cover only incremental costs B) only utilizes the market-based approach to pricing and not the cost-based approach C) is a strategic decision D) strives for flexible pricing that can respond to temporary changes in demand Answer: C Diff: 2 Terms: target price Objective: 3 AACSB: Reflective thinking 3) For long-run pricing decisions, using stable prices has the advantage of: A) minimizing the need to monitor competitor's prices frequently B) reducing the need to change cost structures frequently C) reducing competition D) helping to build buyer-seller relationships Answer: D Diff: 2 Terms: target price Objective: 3 AACSB: Reflective thinking
Answer the following questions using the information below: Black Forrest manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be \$240 per table, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Black Forrest policy to add a 50% markup to full costs. 4) A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Black Forrest is invited to submit a bid to the hotel chain. What per unit price will Black Forrest most likely bid on this long-term order? A) \$144 per unit B) \$216 per unit C) \$360 per unit D) \$240 per unit Answer: C Explanation: C) \$240 + (\$240 × 50%) = \$360 Diff: 2 Terms: cost incurrence Objective: 3 AACSB: Analytical skills Answer the following questions using the information below: Rogers' Heaters is approached by Ms. Sushi, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Rogers' Heaters has excess capacity. The following per unit data apply for sales to regular customers: Direct materials \$400 Direct manufacturing labor 120 Variable manufacturing support 60 Fixed manufacturing support 200 Total manufacturing costs 780 Markup (30%) 234 Estimated selling price \$1,014