PM - Relevant Costing & Transfer Pricing

Which Of the following statements is true Of pricing?

• Discrimination is always illegal so everyone should pay the same amount

• Early adopters get a discount for being first in the market

• Pricing against a similar competitor is important in the Internet age

• Price to make the most sales in that way you will always get the most profit

Which Of the following conditions would need to be true for a price skimming strategy to

be effective?

• An existing product where the owners have decided to increase prices to move the

  product up market

• Where the product has a long life-cycle

• Where the product has a Short life-cycle

• Where only modest development costs had been incurred

Which of the following conditions must be true for a price discrimination strategy to be

effective?

• Buying power Of customers must be similar in both market segments

• Goods must not be able to move freely between market segments

• Goods must be able to move freely market segments

• The demand curves in each market must be the same

A product has a prime cost Of $12, variable overheads Of $3 per unit and fixed overheads Of

$6 per unit.

Which pricing policy gives the highest price?

• Prime cost + 80%

• Marginal cost +

• Total absorption cost + 20%

• Net margin Of 14% on selling price

The demand for a product is units when the price is $400 and units when price

is $380, The variable cost Of the product is The variable cost Of the product is $200.

What is the optimum price to charged in order to maximise profit?

• $150

• $200

• $350

• $700

The following price and demand combinations have been given:

Pl = $400, QI = 5,000 units

P2 = $380, Q2 = 5,500 units

The variable cost is a constant at $80 per unit and fixed costs are $60000 per annum-

What is the demand function?

• P = 200—0.04Q

• P = 600-0.04Q

• P -600 0.04Q

• P = 200 -20Q

The following price and demand combinations have been given:

Pl = $4U QI = 5,000 units

P2 = $380, Q2 = units

The variable cost is a constant at $80 per unit and fixed costs are per annum.

The optimal price is (to the nearest S):

Appler is considering the relevant cash flows involved in a short-term decision,

important client has asked for the minimum price for the processing of a compound.

compound involves the following:

An

The

Material A: Appler needs kg of material for the compound but has kg in stock at

present. The stock items were bought 3 months ago for S5/kg but have suffered 10%

shrinkage since that date, Material A is not regularly used in the business and would have

to be disposed of at a cost to Appler of $400 in total. The current purchase price of material

A is $6.25/kg.

Material B: Appler needs 800 kg Of material B and has this in stock as it is regularly needed.

The stock was bought 2 months ago for S4/kg although it can be bought now at $3,75/kg

due to its seasonal nature.

Processing energy costs would be and the supervisor says they would allocate $150 of

their weekly salary to the job in the company's job costing system.

Based upon the scenario information, what is the total cost of material A and B to be built

in to the minimum price calculation (to the nearest S)?

Appler is considering the relevant cash flows involved in a short-term decision. An

important client has asked for the minimum price for the processing of a compound. The

compound involves the following:

Material A: Appler needs 5(X) kg Of material for the compound but has 200 kg in Stock at

present. The stock items were bought 3 months ago for S5/kg but have suffered 10%

shrinkage since that date. Material A is not regularly used in the business and would have

to be disposed of at a cost to Appler of $400 in total. The current purchase price of

material A is $6.25/kg.

Material B: Appler needs 800 kg Of material B and has this in Stock as it is regularly needed.

The stock was 2 months ago for $4/kg although it can bought now at $3.75/kg

due to its seasonal nature.

Processing energy costs would be $200 and the supervisor says they would allocate $150 of

their weekly salary to the job in the company's job costing system.

Based upon the scenario information, what is the total cost for processing and

supervision to be included in the minimum price calculation (to the nearest S)?

What is the maximum price per component, at which buying is preferable to internal

manufacture?

• $8.00

• $10.50

• $12.50

• $15.50