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To analyze the tradeoffs between product cost and product functionality, companies frequen

To analyze the tradeoffs between product cost and product functionality, companies frequently use: 
A. task analysis.
B. supply-chain management.
C. cost-plus pricing.
D. value engineering.

 

12. A manufacturer is developing a new type of consumer electronic which will have a target price of $325. In order to maintain a target profit equal to 30 percent of the new product’s cost, the target cost should be: 
A. $250.00
B. $  97.50
C. $152.50
D. $227.50

 

13. A manufacturer is developing a new type of vacuum cleaner which will have a target price of $450. In order to maintain a target profit equal to 35 percent of the new product’s cost, the target cost should be: 
A. $157.50
B. $333.33
C. $292.50
D. $116.67

 

14. Chaudron Ltd. plans to come out with a new line of pots and pans. Marketing studies have indicated that a target price of $500 should be set for a complete set of pots and pans. If the company’s target profit is 40 percent of cost, what should be the target cost for the new product line? 
A. $142.86
B. $300.00
C. $357.14
D. $200.00

 

15. Which type of pricing is a company using when a desired markup is added to the product’s base cost to determine the sales price? 
A. Target pricing
B. Cost-plus pricing
C. Penetration pricing
D. Value Pricing

 

16. In cost-plus pricing, the markup percentage should be sufficient to: 
A. cover the base cost plus a desired profit.
B. cover the base cost less a desired profit.
C. cover costs not included in the base cost plus a desired profit.
D. cover costs not included in the base cost.

 

17. HNT Inc. has begun production on a new type of television satellite dish. The primary cost of the dish is direct materials with a cost of $50. Direct labor is estimated to be $8 per unit, overhead is estimated to be $10 per unit, and selling and administrative expenses are estimated to be $5 per unit.

If HNT desires a profit of $75 per unit, what is the required markup on direct materials? 
A. 148%
B. 150%
C.   98%
D. 196%

 

18. Putnam Inc. has begun production on a new electronic product. The primary cost of the product is direct materials with a cost of $30. Direct labor is estimated to be $5 per unit, overhead is estimated to be $3 per unit, and selling and administrative expenses are estimated to be $2 per unit.

If Putnam desires a profit of $50 per unit, what is the required markup on direct materials? 
A. 193%
B.   67%
C. 200%
D. 167%

 

19. Benning Inc. manufactures and installs residential decks. The company is preparing to bid on a competitive job. Benning estimates that the job will have the following costs:
 

Direct materials

$1,600

Direct labor

900

Overhead

400

Selling and administrative costs

240

 

 


Benning would like to earn a $1,500 profit on the job. The company applies a markup on cost of goods sold to arrive at an initial bid price.

Refer to the Benning Inc. information above. What is the markup percentage on the above job? 
A. 60.0%
B. 51.7%
C. 43.4%
D. 47.7%

 

20. Benning Inc. manufactures and installs residential decks. The company is preparing to bid on a competitive job. Benning estimates that the job will have the following costs:
 

Direct materials

$1,600

Direct labor

900

Overhead

400

Selling and administrative costs

240

 

 


Benning would like to earn a $1,500 profit on the job. The company applies a markup on cost of goods sold to arrive at an initial bid price.

Refer to the Benning Inc. information above. What should be Benning’s initial bid? 
A. $3,100
B. $4,640
C. $4,400
D. $4,000

Jan 11 2020 View more View Less

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