Question 1

Red Co.uses the product cost concept of applying the cost-plus approach to product pricing.Given below is cost information for the production and sale of 40,000 units of its sole product.Red Co.desires a profit equal to a 15% rate of return on invested assets of $1,200,000. ?   Fixed factory overhead cost $80,000.00 Fixed selling and administrative costs 140,000.00 Variable direct materials cost per unit 7.00 Variable direct labor cost per unit 11.00 Variable factory overhead cost per unit 3.00 Variable selling and administrative cost per unit 2.00\begin{array} { l r } 	ext { Fixed factory overhead cost } & \$ 80,000.00 \	ext { Fixed selling and administrative costs } & 140,000.00 \	ext { Variable direct materials cost per unit } & 7.00 \	ext { Variable direct labor cost per unit } & 11.00 \	ext { Variable factory overhead cost per unit } & 3.00 \	ext { Variable selling and administrative cost per unit } & 2.00\end{array} Fixed factory overhead cost  Fixed selling and administrative costs  Variable direct materials cost per unit  Variable direct labor cost per unit  Variable factory overhead cost per unit  Variable selling and administrative cost per unit ​$80,000.00140,000.007.0011.003.002.00​  ?
The unit selling price for the company's product is:

Accepted Answer

A)   $28.
B)   $37.
C)   $42.
D)   $33. E) B) and C)
F) A) and D)

Question 2

What cost concept used in applying the cost-plus approach to product pricing includes total manufacturing costs and total selling and administrative expenses in the "cost" amount to which the markup is added?

Accepted Answer

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

Exam 12: Differential Analysis and Product Pricing

What cost concept used in applying the cost-plus approach to product pricing includes total manufacturing costs and total selling and administrative expenses in the "cost" amount to which the markup is added?

Correct Answer
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Correct Answer
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Exam 12: Differential Analysis and Product Pricing

What cost concept used in applying the cost-plus approach to product pricing includes total manufacturing costs and total selling and administrative expenses in the "cost" amount to which the markup is added?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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