Question 1
The Estrada Company uses cost-plus pricing with a 0.35 mark-up. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $5.60. In addition, the company incurs $196,500 in fixed costs annually. If demand falls to 77,600 units and the company wants to continue to earn a 0.35 return, what price should the company charge?
Question 2
A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $122.00 per unit. The company requires a profit of 0.28 of selling price. How much is the target cost per unit?
Question 3
A company using activity based pricing marks up the direct cost of goods by 0.22 plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $7.80 per order placed; $2.20 per separate item ordered; $29.80 per return. A customer places 6 orders with a total direct cost of $2,700, orders 293 separate items, and makes 3 returns. What will the customer be charged?
Question 4
A law firm uses activity-based pricing. The company's activity pools are as follows:
|
Cost Pool
|
Annual Estimated Cost
|
Cost Driver
|
Annual Driver Quantity
|
|
Consultation
|
180,000
|
Number of consultations
|
100 consultations
|
|
Administrative Costs
|
139,000
|
Admin labor hours
|
10,000 labor hours
|
|
Client Service
|
94,000
|
Number of clients
|
120 clients
|
The firm had two consultations with this client and required 130 administrative labor hours. What additional costs will be charged to this customer?