Pricing decisions, Analyses and profitability
Quiz for mangerial accounting
1. Tory Company sells a single product. Troy estimates demand and costs at various activity levels as follows:
| Units Sold | Price | Total Variable Costs | Fixed Costs |
| 120,000 | $48 | $3,000,000 | $1,000,000 |
| 146,500 | $45 | $3,540,000 | $1,000,000 |
| 160,000 | $40 | $4,000,000 | $1,000,000 |
| 180,000 | $35 | $4,500,000 | $1,000,000 |
| 200,000 | $30 | $5,000,000 | $1,000,000 |
How much profit will Troy have if a price of $45 is charged?
2. The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.25 above full cost. Management estimates that the variable cost of the globe will be $66 per unit and fixed costs per year will be $240,000.
Assuming sales of 1,200 units, what is the full cost of a globe with a 0.25 markup?
3. The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.30 above full cost. Management estimates that the variable cost of the globe will be $60 per unit and fixed costs per year will be $240,000.
Assume that the quantity demanded at the price calculated in part a is only 600 units. What is the full cost of the globe with a 0.30 markup?
4.
Wizard Corporation has analyzed their customer and order handling data for the past year and has determined the following costs: | |||||||||||||||||
Order processing cost per order | $7 | ||||||||||||||||
Additional costs if order must be expedited (rushed) | $10.00 | ||||||||||||||||
Customer technical support calls (per call) | $12 | ||||||||||||||||
Relationship management costs (per customer per year) | $1200 | ||||||||||||||||
In addition to these costs, product costs amount to 75% | |||||||||||||||||
In the prior year, Wizard had the following experience with one of its customers, Chester Company: | |||||||||||||||||
Sales | $15,500 | ||||||||||||||||
Number of orders | 160 | ||||||||||||||||
Percent of orders marked rush | .70 | ||||||||||||||||
Calls to technical support | 80 | ||||||||||||||||
Required: | |||||||||||||||||
Calculate the profitability of the Chester Company account. 5.
|
-
Rating:
/5
Solution: Pricing decisions, Analyses and profitability