Question

Assuming a constant mix of 4 units of Small for every 1 unit of Large.

	Small	Large	Total
Sales	$20	$30
Variable costs	15	18
Fixed costs			$48,000

What is the breakeven point in units for Small?

Group of answer choices

6,000 units

2,800 units

4,800 units

4,500 units

Question 17

Answer questions 17-18 using the information below:

Tosla Corporation has invested $1,000,000 in a plant to make commercial juicer machines. The company plans annual sales of 20,000 juicer machines. The target return on investment is 6% annually. Expected costs for next year are as follows:

Variable costs: $10 per unit

Fixed costs: $80,000

Assume the full cost is the cost base. What is the target selling price for Tosla Corporation?

Group of answer choices

$15

$20

$17

$22

Question 18

What is the markup as a percentage of total cost?

Group of answer choices

$21.43%

$18.22%

$25.95%

$17.65%

Question 19

The pricing strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide adequate operating income is referred to as

Group of answer choices

cost-plus pricing, or cost-based approach

market-based approach

loss leading strategy

short-run pricing

Question 20

Answer questions 20-22 using the following information:

Travis Inc. and Vesser Inc. are two small clothing companies that are considering leasing a dyeing machine together. If each company rents the machine on its​ own, it will cost $63,000 for Travis and $45,500 for Vesser. If they rent the machine​ together, the fee will decrease to $93,000.

If the stand-alone method were used, what amount of cost would be allocated to Travis Inc.?

Group of answer choices

$54,000

$45,500

$47,500

$63,000

Question 21

If the incremental method were used, what amount of cost would be allocated to Travis Inc.? Assume Travis is ranked as the primary user.

Group of answer choices

$37,750

$45,500

$63,000

$47,500

Question 22

If the Shapley value method were used, what amount of cost would be allocated to Travis Inc.?  

Group of answer choices

$55,250

$46,500

$54,250

$54,000

Question 23

Most of a product’s life-cycle costs are locked in by decisions made during the business function of the value chain.

Group of answer choices

manufacturing

design

marketing

customer service

Answer 1

Question 1

Correct answer-------------6,000 units

Working

Working		Small	Large		Total
A	Price	$               20.00	$             30.00
B	Variable Cost per unit	$               15.00	$             18.00
C = A - B	Contribution Margin	$                  5.00	$             12.00
D	Product Mix	80.00%	20.00%		100.00%
E = C x D	Weighted Average Contribution Margin	$                  4.00	$                2.40		$        6.40

.

A	Total Fixed Cost plus profit	$       48,000.00
B	Weighted Average Contribution Margin	$                  6.40
C = A/B	Multi Product Break Even point	7,500
C x 80%	Small	6,000