# What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 150%?

. Which

of the following is a common type of value engineering in which the performance

and cost of each major function or feature of the product is examined?

A. Cost

analysis.

B. Variable

design engineering.

C. Cost-based

value engineering.

D. Functional

analysis.

E. Design

analysis.

62.

A

type of strategic pricing based on analytical methods is used to:

A. Optimally

determine the best price.

B. Utilize

knowledge of the sales life cycle in setting price.

C. More

accurately determine life cycle costs as a basis for setting price.

D. Employ

improved design methods that reduce cost and improve price.

Johnson

Marine has the following costs and expected sales for the coming year. Johnson

is considering a number of different methods to determine the price of its

product.

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63.

If

Johnson determines price using a 40% markup of full manufacturing cost, the

price is:

A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

64.

If

Johnson determines price so as to receive a desired return on assets of 15%,

the price is:

A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

65.

If

Johnson determines price using a desired gross margin percentage of 50%, the

price is:

A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

66.

If

Johnson determines price using a desired return on life cycle costs of 30%, the

price is:

A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

67.

If

Johnson determines price using a 20% markup of life cycle cost, the price is:

A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

68. Caldwell

Company desires to enter a market with a new product. As part of this process

the following tasks will be performed:

1.

Determine

a desired profit margin.

2. Use

Kaizen costing.

3. Design

and engineer the product.

4. Determine

the product’s cost.

5. Determine

the suggested selling price.

Which task would Caldwell Company

perform first if it plans to use target costing?

A. Determine

a desired profit margin.

B. Use

Kaizen costing.

C. Design

and engineer the product.

D. Determine

the product’s cost.

E. Determine

the suggested selling price.

69.

The

five tasks that follow take place with the concept known as target costing:

1.

Use

value engineering to identify ways to reduce product cost.

2. Determine

the market price.

3. Determine

the desired profit.

4. Use

kaizen costing and operational control to reduce costs.

5. Calculate

the target cost at market price less desired profit.

Which of the following choices

depicts the correct sequence of these tasks?

A. 1,

2, 3, 4, 5

B. 2,

3, 5, 1, 4

C. 3,

2, 5, 4, 1

D. 3,

2, 5, 1, 4

E. 5,

3, 2, 4, 1

70. David

Corporation manufactures a single product that has a cost of $250. The company

uses a 60% markup on manufacturing cost to arrive at a selling price of $400,

which results in a price that is higher than that of the leading competitors.

If David adopts the approach known as target costing, the company will first:

A. Reduce

the 60% markup rate.

B. Re-engineer

the product.

C. Obtain

a better understanding of the competitors’ prices.

D. Reduce

the $250 cost.

E. Change

to a markup on life cycle cost rather than manufacturing cost.

71.

Baldwin produces bicycles in a highly

competitive market. During the past year, the company has added a 20% markup on

the $300 manufacturing cost for one of its most popular models. A new

competitor recently entered the market with a competitive model that is priced

at $320, seriously eroding Baldwin’s market share. Management now desires to

use a target-costing approach to remain competitive and is willing to accept a

20% return on sales.

If

target costing is used, which of the following choices correctly denotes (1)

Baldwin’s selling price and

(2) Baldwin’s target cost?

A.

Option

A

B. Option

B

C. Option

C

D. Option

D

E. Option

E

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The

Gargus Company, which manufactures projection equipment, is ready to introduce

a new line of portable projectors. The following data are available for a

proposed model:

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72. What

price will the company charge if the firm uses cost-plus pricing based on

variable manufacturing cost and a markup percentage of 200%?

A. $810.

B. $450.

C. $540.

D. $675.

E. Some

other amount.

73. What

price will the company charge if the firm uses cost-plus pricing based on total

variable cost and a markup percentage of 150%?

A. $405.00.

B. $540.00.

C. $675.

D. $900.00.

E. Some

other amount.

74.

What price will the company charge if

the firm uses cost-plus pricing based on absorption cost and a markup

percentage of 110%?

A. $445.50.

B. $850.50.

C. $660.

D. $1260.

E. Some

other amount.

75. What

price will the company charge if the firm uses cost-plus pricing based on total

cost and a markup percentage of 30%?

A. $180.

B. $121.50.

C. $780.

D. $526.50.

E. Some

other amount.

56. Which

of the following is a common type of value engineering in which the performance

and cost of each major function or feature of the product is examined? A. Cost

analysis. B. Variable

design engineering. C. Cost-based

value engineering. D. Functional

analysis. E. Design

analysis. 62.

A

type of strategic pricing based on analytical methods is used to: A. Optimally

determine the best price. B. Utilize

knowledge of the sales life cycle in setting price. C. More

accurately determine life cycle costs as a basis for setting price. D. Employ

improved design methods that reduce cost and improve price. Johnson

Marine has the following costs and expected sales for the coming year. Johnson

is considering a number of different methods to determine the price of its

product.1clip_image001.jpg”>63.

If

Johnson determines price using a 40% markup of full manufacturing cost, the

price is: A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

64.

If

Johnson determines price so as to receive a desired return on assets of 15%,

the price is: A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

65.

If

Johnson determines price using a desired gross margin percentage of 50%, the

price is: A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

66.

If

Johnson determines price using a desired return on life cycle costs of 30%, the

price is: A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

67.

If

Johnson determines price using a 20% markup of life cycle cost, the price is: A. $262.50

B. $306.00

C. $375.00

D. $364.29

E. $330.00

68. Caldwell

Company desires to enter a market with a new product. As part of this process

the following tasks will be performed: 1.

Determine

a desired profit margin. 2. Use

Kaizen costing. 3. Design

and engineer the product. 4. Determine

the product’s cost. 5. Determine

the suggested selling price. Which task would Caldwell Company

perform first if it plans to use target costing?A. Determine

a desired profit margin. B. Use

Kaizen costing. C. Design

and engineer the product. D. Determine

the product’s cost. E. Determine

the suggested selling price. 69.

The

five tasks that follow take place with the concept known as target costing: 1.

Use

value engineering to identify ways to reduce product cost. 2. Determine

the market price. 3. Determine

the desired profit. 4. Use

kaizen costing and operational control to reduce costs. 5. Calculate

the target cost at market price less desired profit. Which of the following choices

depicts the correct sequence of these tasks?A. 1,

2, 3, 4, 5 B. 2,

3, 5, 1, 4 C. 3,

2, 5, 4, 1 D. 3,

2, 5, 1, 4 E. 5,

3, 2, 4, 1 70.