In the modern world there are many more influences on price than cost.List any five of them

2. The price of a good is $1.20 per unit and annual demand is 800,000 units. Market research indicates that an increase in price of 10 cents per unit will result in a fall in annual demand of 75,000 units. What is the price elasticity of demand between prices of $1.20 and $1.30 per unit?
4. EA has different rates for pensioner and adult. . What we call such kind of pricing strategy
6. If the firm wishes to discourage new entrants into the market. . What kind of pricing is appropriate?
8. Economic theory argues that the higher the price of a good, the lower will be the quantity demanded. When we call demand is perfectly elastic?
10. Managers need timely, relevant, adequate and accurate cost information for informed decision. List ABC Questions , BEP techniquesandcharacteristics that makes an information relevant.(7)

B.. Relevant information and decision making questions

A.BRK Company, which Manufactures bags, has a Capacity of 130,000 bags per month. Currently its operating capacity is 100,000 units. The company receives a special order of 20,000 bags at $9 a bag. A Predicted Income Statement for the year without this special order follows:

Per Unit

Total

Sales Revenue

$12.50

$1,250,000

Manufacturing Costs:

Variable

$ 6.25

$ 625,000

Fixed

$ 1.75

$ 175,000

Total Man. Costs

$ 8.00

$ 800,000

Gross Profit

$ 4.50

$ 450,000

Selling & admin. Costs:

Variable

$ 1.80

$ 180,000

Fixed

$ 1.45

$ 145,000

Total Selling & admin Costs

$ 3.25

$ 325.000

Operating Profit

$ 1.25

$ 125,000

If the order is accepted, all fixed costs are not affected.

Required:

2. Should the special order be accepted?
4. At what selling price per unit from the customer would the company be economically indifferent between accepting and rejecting the order?
6. What price per unit should be charged on the special order to increase operating profit by $9,000?

B. The below illustration assumes a shortage of direct labor as the limiting resource constraint. The details of the company's three product lines (A,B,C) are as follows:

Per unit

Product A

Product B

Product C

Selling price

50

40

30

Variable cost

20

22

20

Maximum labor hours available =12,000

The company produces one unit of A, two units of B, and six units of C in one direct labor hour

Required

2. If annual demand for all products is more than the company can produce next year, which product should the company emphasize?
4. If expected demand for each product is limited (A, 10,000 units; B, 5000 units; C, 6000 units), how many units of each product must be produced? Total contribution margin?

C.A vendor has offered to supply a component for $38 (FOB destination) that has previously been manufactured internally.

Per unit

DM$18

DL6

Variable overhead3

Fixed Overhead4

Total cost$31

Suppose fixed costs cannot be avoided if the component is purchased from outside. Should the company make or buy if the vacated facilities are:

a.left idle?

b.Used for other purpose which generates net benefit of Br. 10,000?

c.Rented out for Br. 15,000