41 42 43 44 45 46 47 48 Q5: Cuff budgets sales of its truck tires at $235 per tire and estimates that 10,000 tires can be sold during the coming year. Variable costs per tire are $60 and Cuff desires a profit of $34 per tire. The target cost per tire is: A) $60 B) $201 C) $175 D) $235 49 50 Q6: A company must price its product to cover its costs and earn a reasonable profit in 51 52 53 54 55 A) all cases B) its early years C) the long run D) the short run 56 57 Q7: Adler Company is considering developing a new product. The company has 58 gathered the following information on this product: 59 Expected total unit cost: $25 60 Estimated investment for new product: $500,000 61 Desired ROI: 10% 62 Expected number of units to be produced and sold: 1,000 63 The desired markup percentage (Total Cost Approach) and selling price are: (2 Marks) A) markup percentage 100% ; selling price $55. 64 65 65 67 68 B) markup percentage 10% ; selling price $55 C) markup percentage 200%; selling price $75. D) markup percentage 109; selling price $50. 69 70 QS: In the variable cost approhe markup percentage covers the A) fixed costs only. B) desired ROI only. 72 73 C) desired ROI and fixed costs. 74 D) desired ROI and selling and administrative expenses. 75 76 77 7B 79 80 81 09: Which statement is true of an opportunity cost? A) It is a variable cost. B) It is the cost of a special-order option. C) It is the potential benefit given up as a result of following an alternative course of action. D) It is a fixed cost. 82 B