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The pricing objective of maximizing profits a. must be considered when determining th

The pricing objective of maximizing profits a. must be considered when determining th

The pricing objective of maximizing profits

 

a.

must be considered when determining the price needed to increasemarket share.

 

b.

has not been affected by other, more socially focusedconcerns.

 

c.

has not always been considered the underlying objective of anypricing policy.

 

d.

is to be implemented under any and all circumstances.

Development of a transfer price involves

 

a.

the use of the highest external market price so that thetransferring division is very profitable.

 

b.

computation of the selling and delivery costs of the item beingtransferred.

 

c.

the use of a team of lawyers representing the outside interestsof the company.

 

d.

determination of an appropriate profit markup.

The state of Illinois has passed a law requiring that everyautomobile be inspected at least once a year for pollution control.Anfang Enterprises is considering entering into this type ofbusiness. After extensive studies, Joseph Anfang has developed thefollowing set of projected annual data on which to make hisdecision:

Direct service labor

$363,000.00

Variable service overhead costs

270,000.00

Fixed service overhead costs

280,000.00

Marketing expenses

120,000.00

General and administrative expenses

170,000.00

Minimum profit

90,000.00

Cost of assets employed

500,000.00

 

 

 

Anfang believes that his company will inspect 100,000 automobilesper year. The company earns an average of 18.75 percent return onits assets.

The projected cost for inspecting each automobile would be

 

a.

$12.03.

 

b.

$12.93.

 

c.

$10.03.

 

d.

$11.13.

Abhinav 02-Dec-2019

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