Which of the following is a true statement?O The mark-up is designed to cover all non-product costs, such as labor, utilities, supplies, interest expense, taxes, and also to provide the desired profit.Everything else being the same, the multiple for the ingredient mark-up approach to pricing will be smaller than the multiple for the prime ingredient mark-up approach.In the ingredient mark-up approach to pricing, the multiple is determined by dividing 1 by the desired product cost percentage.O All of the above.Only a. and c. above.QUESTION 21The Hotel is located on Jeju Island, Korea, a popular honeymoon destination area. For two weeks every spring, thousands of newlyweds travel to the area for fun andrelaxation. Which of the following yield management tactics would make sense for pricing rooms during these two weeks?O Refuse reservations for one-night stays.O Sell all rooms at the same rates during these two weeks.Require a three-day minimum stay at the quoted rate for each distribution channel.All of the above.O Only a. and c. above.QUESTION 22The Inn is a 100-room inn that was built ten years ago for a total project cost of $7,500,000. The market value of the facility is now estimated at $10,000,000 and the General Manager estimates that thelevel of guest services is worth at least $2,000 per room per ycar. A close competitor of The Inn charges $80 per night per room. What is the estimated room rate using the $1 per $1,000 approach?O 559.$75.$78.$86.O $100.

Answer: only a and c above The markup method is commonly used in pricing restaurant food menus and…

Which of the following is a true statement? O The mark-up is designed to cover all non-product costs, such as labor, utilities, supplies, interest expense, taxes, and also to provide the desired profit. O Everything else being the same, the multiple for the ingredient mark-up approach to pricing will be smaller than the multiple for the prime ingredient mark-up approach. O In the ingredient mark-up approach to pricing, the multiple is determined by dividing 1 by the desired product cost percentage. O All of the above. O Only a. and c. above.

Which of the following is a true statement? O The mark-up is designed to cover all non-product costs, such as labor, utilities, supplies, interest expense, taxes, and also to provide the desired profit. O Everything else being the same, the multiple for the ingredient mark-up approach to pricing will be smaller than the multiple for the prime ingredient mark-up approach. O In the ingredient mark-up approach to pricing, the multiple is determined by dividing 1 by the desired product cost percentage. O All of the above. O Only a. and c. above.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 4SEQ: For which cost concept used in applying (he cost-plus, approach to product pricing are fixed...

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For which cost concept used in applying (he cost-plus, approach to product pricing are fixed manufacturing costs, fixed selling and administrative expenses, and desired profit allowed for in determining the markup? A. Total cost B. Product cost C. Variable cost D. Standard cost
The following information pertains to three different product being sold by Esther Company: Which product or products have an inelastic demand curve? a. Product A b. Product B c. Product C d. Both Product A and Product C
a difference in cost-plus pricing and target costing is that target costing starts with the price customers are willing to pay whereas cost-plus pricing starts with the cost. computes the desired markup while cost-plus pricing computes the maximum cost the company is willing to incur. is generally determined after introducing a product and cost-plus pricing is determined before introducing a product. is a simple approach while cost-plus pricing is relatively complex.
Which of the statement is not a true reflection of Target cost gap ? The target cost gap = Estimated product cost - Target cost The first step is to establish a competitive market price TheTarget cost gap is established in the 4th step of the target cost process A target cost gap is predetermined
When using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup? Total costs plus desired profit Desired profit Total selling and administrative expenses plus desired profit Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit
Which of the following choices correctly denotes the data needed to allocate joint costs under the relative-sales-value method? Sales Value of Product at Split-Off Separable Cost Sales Value of Product After Processing Beyond Split-Off A. Yes Yes No B. Yes Yes Yes C. Yes No No D. No Yes Yes E. No No Yes Choice A Choice D Choice C Choice B Choice E
Cost Plus Pricing This is the most common cost-based approach to pricing a product, in which a marketer figures all costs for the product and then adds an amount to cover profit. In some cases, any costs of doing business that are not assigned to specific products. The most frequently used type of cost-plus pricing is straight markup pricing. The price is calculated by adding a predetermined percentage to the cost. Most retailers and wholesalers use markup pricing exclusively because of its simplicity - users need only estimate the unit cost and add the markup. The first step requires that the unit cost be easy to estimate accurately and that production rates are fairly consistent. We assume that a jeans’ manufacturer has fixed costs (the cost of the factory, advertising, managers’ salaries, etc.) of $2,000,000. The variable cost for a pair of jeans (the cost of fabric, zipper, thread, and labor) is $20.00. With the current plant, the firm can produce a total of 400,000 pairs of…
Which of the following is not an application of cost-volume-profit analysis? Setting prices for products and services. Performing strategic “what-if” analyses. Deciding whether to cut a product line. Determining the short-term cost or profit implications of many decisions. Deciding whether to make or buy a given product or service.
The decision of whether to process products beyond the splitoff process should be based on which of the following? Select one: a. Production cost analysis b. Revenue analysis c. Incremental operating income attainable beyond the splitoff point d. Relevant cost analysis e. Gross margin analysis
Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis? Select one: a. As long as the contribution margin is a positive number, net income will be positive b. As long as variable costs are more than fixed costs, net income will be negative c. As long as the contribution margin is greater than fixed costs, net income will be positive d. As long as the sales price per unit is greater than fixed costs per unit, net income will be positive
Which of the following statements accurately describes the "relevant range?" a. The operation range in which fixed costs are expected to remain the same. b. The operation range in which the firm can earn a profit. c. The operation range which can satisfy unusual product demand. d. The operation range in which variable costs rise proportionately.
a) Compare and contrast variable cost-plus pricing and target pricing, and indicate the circumstances in which each might be appropriate. b) Compute the selling price based on the compay’s pricing policy and indicate whether the customer’s maximum price is consistent with the company’s pricing policy. c) Assume that further tests have confirmed the product’s useful life, and that SA Berhad wishes to maximise profits by reducing costs. Indicate techniques which could be used to achieve a reduction in the product cost. d) Define Business Process Re-engineering (BPR).