1. When companies do not want to use market prices or find it too costly, they typically use __________ prices, even though suboptimal decisions may occur.
2. The first step in implementing target pricing and target costing is
3. The amount of markup percentage is usually higher if
4. An understanding of life-cycle costs can lead to
5. Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units?
6. A benefit of using a market-based transfer price is
7. A transfer-pricing method leads to goal congruence when managers
8. When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called
9. An advantage of using budgeted costs for transfer pricing among divisions is that
10. Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound. Which of the following formulas correctly reflects the company's operating income per pound?