1. The Manassas Company has 55 obsolete keyboards that are carried in inventory at a cost of $9,600. If these keyboards are upgraded at a cost of $7,400, they could be sold for $19,000. Alternatively, the keyboards could be sold "as is" for $8,500.
What is the net advantage or disadvantage of re-working the keyboards?
2. A company has $7.40 per unit in variable costs and $3.60 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.41, what price should be charged if 58,000 units are expected to be sold?
3. The Estrada Company uses cost-plus pricing with a 0.35 mark-up. The company is currently selling 100,000 units. Each unit has a variable cost of $4.10. In addition, the company incurs $182,300 in fixed costs annually. If demand falls to 75,100 units and the company wants to continue to earn a 0.35 return, what price should the company charge?