A company has a total cost of $40.00 per unit at a volume of 120,000 units. The

Question

A company has a total cost of $40.00 per unit at a volume of 120,000 units. The variable cost per unit is $25.00. What would the price be if the company expected a volume of 110,000 units and used a markup of 50%?

A.

B.

C.

D.

A. No, because the incremental loss will be $7.50 per case. B. No, because there are too many qualitative considerations. C. Yes, because the incremental profit will be $2.50 per case. D. Yes, because the incremental profit will be $1.67 per case.

Road Masters Trucking Company allocates the rent costs and dispatcher's salaries to their different service departments on the basis of miles driven. Estimated costs and miles driven are summarized below:
Rent $20,000 Dispatcher salaries $45,000 Local Delivery 620,000 miles Long-Haul 1,450,000 miles
If cost allocations are computed to 4 significant digits, how much of the rent and salaries costs will be allocated to the long-haul department?
Rent Salaries Answer A. $14,065 $31,465 B. $31,465 $14,065 C. $13,500 $6,000 D. $6,000 $13,500

A company believes it can sell 5,000,000 of its proposed new optical mouse at a price of $11.00 each. There will be $8,000,000 in fixed costs associated with the mouse. If the company desires to make a profit $2,000,000 on the mouse, what is the target variable cost per mouse? Answer A. $9.40 B. $11.00 C. $10.60 D. $9.00
Bangor Company makes products C and D. Information for overhead costs and for the two products appears below. The company makes 50,000 units of product C each year and 20,000 units of product D.
Activity Driver Total Overhead Cost Prod C Usage Prod D usage Setups # of setups $200,000 500 setups 1,500 setups Ordering parts # of parts $300,000 60,000 parts 40,000 parts Machining MH $600,000 12,000 MH 6,000 MH Inspections # of Insp $400,000 10,000 Insp 40,000 Insp Shipping # of shipments $300,000 10,000 Ship 10,000 Ship Total overhead $1,800,000 * MH

Explanation / Answer

No, because there are too many qualitative considerations.

$13,500
$6,000 $11.00


C. $100 per unit



$100 per unit $13,500
$6,000

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