1.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.

Assuming sales of 1,200 units, what is the full selling price of a globe with a 0.30markup?

2.A company believes it can sell5,600,000 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?

3.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

$7Additional costs if order must be expedited (rushed)

$10.00Customer technical support calls (per call)

$12Relationship management costs (per customer per year)

$1200In addition to these costs, product costs amount to75% of Sales.

In the prior year, Wizard had the following experience with one of its customers, Chester Company:

Sales

$16,000Number of orders

160Percent of orders marked rush

70%Calls to technical support

80Required:

Calculate the profitability of the Chester Company account.

4.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$625,000Direct labor375,000Variable overhead125,000Fixed overhead1,500,000Total cost$2,625,000 At the start of the current year, the company received an order for 3,400 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 companys first international order. On the other hand, the company in China is willing to pay only $140 per unit.What will be the effect on profit of accepting the order?

5.A company has $50 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 102,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?