Fixed Costs Homework 06, business and finance homework help

User Generated

nuzflu22

Business Finance

Description

Quiz

Question 1 (1 point)

 Question 1 Unsaved

Tory Company sells a single product. Troy estimates demand and costs at various activity levels as follows:

Units SoldPriceTotal Variable CostsFixed Costs
120,000$48$3,000,000$1,000,000
150,500$45$3,510,000$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?

Question 1 options:

Save

Question 2 (1 point)

 Question 2 Unsaved

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 selling price of a globe with a 0.25 markup?

Question 2 options:

Save

Question 3 (1 point)

 Question 3 Unsaved

A company believes it can sell 6,000,000 of its proposed new optical mouse at a price of $11.00 each. There will be $8,000,000 in fixed costs associated with the mouse. If the company desires to make a profit $2,000,000 on the mouse, what is the target variable cost per mouse?

Question 3 options:

Save

Question 4 (1 point)

 Question 4 Unsaved

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% of Sales.

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.

Question 4 options:

Save

Question 5 (1 point)

 Question 5 Unsaved

When a firm adds a predetermined percentage to the cost of its product for pricing purposes, it is called:

Question 5 options:

demand pricing

cost-plus pricing

cost plus demand pricing

Save

Question 6 (1 point)

 Question 6 Unsaved

PowerDrive, Inc. produces a hard disk drive that sells for $175 per unit. The cost of producing 25,000 drives in the prior year was:
  
Direct material$625,000
Direct labor375,000
Variable overhead125,000
Fixed overhead1,500,000
Total cost$2,625,000
At the start of the current year, the company received an order for 3,600 drives from a computer company in China. Management of PowerDrive has mixed feelings about the order. On the one hand they welcome the order because they currently have excess capacity. Also, this is the company’s first international order. On the other hand, the company in China is willing to pay only $135 per unit.
What will be the effect on profit of accepting the order?

Question 6 options:

Save

Question 7 (1 point)

 Question 7 Unsaved

Another name for menu-based pricing is:

Question 7 options:

Customer profitability pricing

Profit maximizing pricing

Activity-based pricing

Save

Question 8 (1 point)

 Question 8 Unsaved

A company has $45 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 106,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?

Question 8 options:

Save

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

QUESTION 1 (1 POINT)YOUR ANSWER: 150500 x 45 - (3,510,000+1,000,000) = $2,262,500QUESTION 2 (1 POINT)YOUR ANSWER: (variable cost + fixed cost)*markup = (1,200*$66 + $240,000)*1.25 = $399,000QUESTION 3 (1 POINT)A company believes it can sell 6,000,000 of its proposed new optical mouse at a price of $11.00 each. There will ...


Anonymous
Really useful study material!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags