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Multiple Choice Quiz
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1
The management of Dante Company believes that every 5% increase in the selling price of one of the company's products will result in an 8% decrease in total unit sales of that product. What is the product's price elasticity of demand (as defined in the text)?
A)-2.41
B)-1.99
C)-1.71
D)-1.25
2
The management of Reacher Company expects that every 9% increase in the selling price of one of the company's products will result in a 10% decrease in total unit sales of that product. The variable production cost of this product is $25.20 per unit and the variable selling and administrative cost is $9.80 per unit. What is the product's profit-maximizing price (using the formula in the text)?
A)$208.40
B)$192.94
C)$41.66
D)$5.49
3
Tiersky Company manufactures a product that has a selling price of $96 per unit. Unit costs associated with the manufacture and sale of the product based on 25,000 units manufactured and sold each year are as follows.
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The company uses the absorption costing approach to cost-plus pricing described in the text. What is the percentage markup being used to determine the selling price for the product?
A)100.0%
B)60.0%
C)40.0%
D)37.5%
4
Streeter Company manufactures a product with the following costs:
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The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 79,000 units per year. The company expects a return on investment of 15% on the $420,000 investment that it made in this product. What is the selling price of the product (based on the absorption costing approach described in the text)?
A)$108.04
B)$73.90
C)$73.10
D)$47.29
5
Reiss Company, a manufacturer of hair dryers, wants to introduce a smaller hair dryer designed for travel. To compete effectively, this hair dryer cannot be priced at more than $13.25. The company requires a 7.5% rate of return on investment on all new products. In order to produce and sell 80,000 of the smaller hair dryers each year, the company will need to make an investment of $800,000. What is the target cost per unit?
A)$15.50
B)$14.00
C)$12.50
D)$1.50





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