The pricing strategy that begins with the determination of a price at which a product will sell and then focuses on developing a cost structure for the product that will yield a profit is known as:
cost-plus pricing.
prestige pricing.
Developmental pricing
target costing.
Chester Company plans to introduce a new product. A market research specialist claims that 20,000 units can be sold at a $100 selling price. Assuming the company desires a profit margin of 22% of sales, what is the target cost per unit?
$128.21
$78
$80
$20
Acme Company has variable costs equal to 30% of sales. The company is considering a proposal that will increase sales by $10,000 and total fixed costs by $7,000. By what amount will net income increase?
$0
$3,000
$7,000
$4,000
How does the cost-volume-profit model accommodate non-linear costs and revenues?
Non-linear costs and revenues are ignored by the model.
Inventory levels are segregated into distinct ranges within which a linear relationship is expected to approximate the actual cost or revenue behavior.
It is not a problem since non-linear costs and revenues do not exist in practice.
None of these is correct.
1)correct option is "D" -target costing.
Under target costing ,A markup %on selling price is determined to determine the cost per unit
2)correct option is "B -78
cost : price [1- markup%]
= [100(1-.22)] = 78
3)correct option is "A" -0
Increase in contribution = Sales [1-variable cost %]
= 10000[1-.30]
= 7000
Increase in net income : 7000 -7000 fixed cost =0
4)correct option is "B" -
Inventory levels are segregated into distinct ranges within which a linear relationship is expected to approximate the actual cost or revenue behavior.
Get Answers For Free
Most questions answered within 1 hours.