Question
46.) Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line ECC video player
46.) Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" video player for a price of $410. It costs ECC $290 to make the player. ECC's main competitor is coming to market with a new video player that will sell for a price of $380. ECC feels that it must reduce its price to $380 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 14%. ECC currently sells 216,000 video players per year. Assuming sales and marketing are not correct in their estimation and the volume of sales is not changed and ECC meets the competitive price, what is the target cost if ECC wants to maintain its same income level?
Multiple Choice
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$290.
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$280.
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$270.
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$260.
48.) Johnson Marine has the following costs and expected sales for the coming year. Johnson is considering a number of different methods to determine the price of its product.
Total Costs | |||
Variable Manufacturing | $ | 2,355,500 | |
Variable Selling and Administrative | 755,500 | ||
Plant-level Fixed Overhead | 1,211,000 | ||
Fixed Selling and Administrative | 605,500 | ||
Batch-level Fixed Overhead | 205,500 | ||
Total Investment in Product Line | 10,016,500 | ||
Expected Sales (units) | 21,100 | ||
If Johnson determines price using a 24% markup of life cycle cost, the price is:
Multiple Choice
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$258.15
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$301.65
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$370.65
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$359.94
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$325.65
49.) The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model:
Variable manufacturing costs | $ | 350 | |
Applied fixed manufacturing overhead | 175 | ||
Variable selling and administrative costs | 130 | ||
Applied fixed selling and administrative costs | 145 | ||
What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 190%?
Multiple Choice
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$897.00.
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$1,032.00.
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$1,167.00.
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$1,392.00.
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None of these answer choices is correct.
50.) The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model:
Variable manufacturing costs | $ | 470 | |
Applied fixed manufacturing overhead | 235 | ||
Variable selling and administrative costs | 190 | ||
Applied fixed selling and administrative costs | 205 | ||
What price will the company charge if the firm uses cost-plus pricing based on total cost and a markup percentage of 70%?
Multiple Choice
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$1,270.00.
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$1,211.50.
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$1,870.00.
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$1,616.50.
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None of these answer choices is correct.
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