22. The short-run differential costs of a product are $25. Fixed costs are $5 per unit based on 10,000 units produced during this period. The company has adequate capacity to accept a special order of 1,000 units. What is the minimum price that could be charged using the differential approach to pricing? $ 5.00 a. b. C. d. $20.00 $25.00 $30.00
22. The short-run differential costs of a product are $25. Fixed costs are $5 per unit based on 10,000 units produced during this period. The company has adequate capacity to accept a special order of 1,000 units. What is the minimum price that could be charged using the differential approach to pricing? $ 5.00 a. b. C. d. $20.00 $25.00 $30.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:22. The short-run differential costs of a product are $25. Fixed costs are $5 per unit based on 10,000 units produced
during this period. The company has adequate capacity to accept a special order of 1,000 units. What is the minimum
price that could be charged using the differential approach to pricing?
a.
b.
C.
d.
23. Sebastian Enterprises sells a product for $25 per unit and has the following costs for the product
Direct Materials
Direct Labor
Total
Variable Overhead
a.
Fixed Overhead
b.
C.
d.
a.
$20
The company received a special order for 100 units of the product. The order would require rental of a special tool which
costs $200. What is the minimum price per unit that Sebastian Enterprises should charge for this special order if they wish
to earn a $300 profit on this order? Assume there is sufficient idle capacity to accept this order.
$18
b.
C.
d.
25.
a.
$5.00
b.
$20.00
C.
$25.00
$30.00
d.
24. What is term used to describe the pricing practice in effect when a business deliberately prices below its costs in an
effort to drive out competitors?
a.
b.
C.
d.
$20
$23
$25
competitive pricing.
cost-based pricing.
target pricing.
Target pricing is anti-competitive.
Target pricing is the same as predatory pricing.
26. Which of the following terms describes the systematic evaluation of all aspects of research and development,
design of products and processes, production, marketing, distribution, and customer service?
quality engineering.
$10
5
incremental engineering.
3
predatory pricing.
Which statement is trueconcerning target pricing?
Target pricing is based on customers' perceived value for the product.
Target pricing is illegal under Federal law.
systems engineering.
2
value engineering.
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