Question 1

Magpie Corporation uses the total cost concept of product pricing. Below is cost information for the production and sale of 60,000 units of its sole product. Magpie desires a profit equal to a 25% rate of return on invested assets of $700,000.  The markup percentage on total cost for the company's product is:

Accepted Answer

A)   21.0%
B)   22.7%
C)   15.8%
D)   24.0%E) B) and C)
F) C) and D)

Question 2

The condensed income statement for a business for the past year is presented as follows:  Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?

Accepted Answer

A)   $20,000 increase
B)   $30,000 increase
C)   $20,000 decrease
D)   $30,000 decreaseE) B) and D)
F) A) and B)

Question 3

What cost concept used in applying the cost-plus approach to product pricing covers selling expenses, administrative expenses, and desired profit in the "markup"?

Accepted Answer

A)   Total cost concept
B)   Product cost concept
C)   Variable cost concept
D)   Sunk cost conceptE) All of the above
F) None of the above

Exam 9: Differential Analysis and Product Pricing

What cost concept used in applying the cost-plus approach to product pricing covers selling expenses, administrative expenses, and desired profit in the "markup"?

Correct Answer
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Correct Answer
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Correct Answer
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Exam 9: Differential Analysis and Product Pricing

What cost concept used in applying the cost-plus approach to product pricing covers selling expenses, administrative expenses, and desired profit in the "markup"?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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