NTN Company\'s market for the Model 55 has changed significantly, and NTN has ha
ID: 2455441 • Letter: N
Question
NTN Company's market for the Model 55 has changed significantly, and NTN has had to drop the price per unit from $265 to $125. There are some units in the work in process inventory that have costs of $150 per unit associated with them. NTN could sell these units in their current state for $100 each. It will cost NTN $10 per unit to complete these units so that they can be sold for $125 each.
5.
A company using activity based pricing marks up the direct cost of goods by 40% plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $6.00 per order placed; $3.00 per separate item ordered; $28.00 per return. A customer places 10 orders with a total direct cost of $2,000, orders 300 separate items, and makes 5 returns. What will the customer be charged?
A)
$3,000
B)
$3,900
C)
$5,330
D)
$5,750
Explanation / Answer
NTN company Details Amt $ Current Cost per unit 150 Selling price/unit at current state 100 Loss per unit at current state 50 Additional cost of completion/unit 10 Total cost per completed unit 160 Selling price per completed unit 125 Loss per completed unit 35 Net benefit per complted unit over unit at current state 15 So saving per unit by completion $ 15.00 Charge for Customer Details Per unit Total Amt $ Order Qty 10 nos Direct Cost 200 2,000 Add Mark up @40% 800 Add Order palcement cost 6 60 Separate items @3 for 300 items 3 900 Return Charges for 5 returns 28 140 Total cost charged to customer $ 3,900 Option B is correct
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