# UMUC MGT640 homework 11

Question 1 (1 point) Question 1 Unsaved
Tory Company sells a single product. Troy estimates demand
and costs at various activity levels as follows:

Units Sold Price Total Variable Costs Fixed Costs
120,000\$48 \$3,000,000 \$1,000,000
150,500\$45 \$3,540,000 \$1,000,000
160,000\$40 \$4,000,000 \$1,000,000
180,000\$35 \$4,500,000 \$1,000,000
200,000\$30 \$5,000,000 \$1,000,000
How much profit will Troy have if a price of \$45 is charged?

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Question 2 (1 point) Question 2 Unsaved
The Falling Snow Company is considering production of a
lighted world globe that the company would price at a markup of 0.30 above full
cost. Management estimates that the variable cost of the globe will be \$64 per
unit and fixed costs per year will be \$240,000.

Assuming sales of 1,200 units, what is the full cost of a
globe with a 0.30 markup?

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Question 3 (1 point) Question 3 Unsaved
The Falling Snow Company is considering production of a
lighted world globe that the company would price at a markup of 0.25 above full
cost. Management estimates that the variable cost of the globe will be \$60 per
unit and fixed costs per year will be \$240,000.

Assume that the quantity demanded at the price calculated in
part a is only 600 units. What is the full cost of the globe with a 0.25
markup?

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Question 4 (1 point) Question 4 Unsaved
Wizard Corporation has analyzed their customer and order
handling data for the past year and has determined the following costs:

Order processing cost per order

\$7
Additional costs if order must be expedited (rushed)

\$10.00

Customer technical support calls (per call)

\$12
Relationship management costs (per customer per year)

\$1200

In addition to these costs, product costs amount to 75%

In the prior year, Wizard had the following experience with
one of its customers, Chester Company:

Sales

\$15,000
Number of orders

160
Percent of orders marked rush

.70
Calls to technical support

80

Required:

Calculate the profitability of the Chester Company account.

Question 4 options:

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Question 5 (1 point) Question 5 Unsaved
When a firm adds a predetermined percentage to the cost of
its product for pricing purposes, it is called:

Question 5 options:

incremental pricing

demand pricing

cost-plus pricing

cost plus demand pricing

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Question 6 (1 point) Question 6 Unsaved
PowerDrive, Inc. produces a hard disk drive that sells for
\$175 per unit. The cost of producing 25,000 drives in the prior year was:

Direct material \$625,000
Direct labor 375,000
Total cost \$2,625,000
At the start of the current year, the company received an
order for 3,600 drives from a computer company in China. Management of
PowerDrive has mixed feelings about the order. On the one hand they welcome the
order because they currently have excess capacity. Also, this is the companyâs
first international order. On the other hand, the company in China is willing
to pay only \$135 per unit.

What will be the effect on profit of accepting the order?
Question 6 options:

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Question 7 (1 point) Question 7 Unsaved
Another name for menu-based pricing is:

Question 7 options:

Cost-plus pricing

Customer profitability pricing

Profit maximizing pricing

Activity-based pricing

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Question 8 (1 point) Question 8 Unsaved
A company has \$35 per unit in variable costs and \$1,200,000
per year in fixed costs. Demand is estimated to be 108,000 units annually. What
is the price if a markup of 40% on total cost is used to determine the price?

Question 8 options:

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