Which of the following is the ideal basis to use for a transfer price when there is a perfectexternal market?
Answer(s): B
S is considering launching a new product.The variable costs of manufacturing the product will be $6 per unit.The product must be manufactured in batches of 2,000 units. The machine set up cost for each batch will be $4,000.Maximum capacity will be 8,000 units each year.Market research has shown that the unit selling price will affect the demand for the product as follows.Which unit selling price will maximise annual profit?
Answer(s): C
The manager of Ice Sculpting Co. believes that too much material is being wasted during downtime. She researched, and found throughput accounting to be an adequate alternative. However, she wasn't sure if all thatshe read was accurate.Which of the following statements are TRUE when using Throughput Accounting? Select ALL that apply.
Answer(s): A,C,D
CORRECT TEXTA firm of accountants uses an activity-based costing system. The firm's costing system permits staff to indicate specific tasks undertaken for clients, such as requesting missing information. The amount charged for a request for missing information is based on the following analysis.Each request takes an average of 15 minutes of professional staff time. Professional staff are charged out at $100 per hour.Administrators then process the information request and prepare a standard letter. The average time administration staff spend on each information request is 20 minutes. The cost of administration staff at the firm is $75,600 per year. Administration staff work for a total of 6,000 hours per year. The cost of printing and posting a letter is $1.Calculate the cost of an information request.Give your answer to 2 decimal places.
Answer(s): A
A company's competitor has just launched a rival product at a selling price of $38 per unit. Until now the company's selling price of $41.60 per unit has achieved a 30% mark-up on the product's unit cost. The company proposes to use a target costing approach to pricing to remain competitive.Management has decided to match the competitor's selling price and has set a target cost to achieve a 20% return on the target price.What is the cost gap?
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