29. A retailer purchased some trendy clothes that have gone out of style and mus

Question

29. A retailer purchased some trendy clothes that have gone out of style and must be marked down to 20% of the original selling price in order to be sold. Which of the following is a sunk cost in this situation?
a. the original selling price
b. the original purchase price
c. the anticipated profit
d. the current selling price



30. A company using activity based pricing marks up the direct cost of goods by 30% plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $8.00 per order placed; $4.00 per separate item ordered; $30.00 per return. A customer places 10 orders with a total direct cost of $3,000, orders 300 separate items, and makes 5 returns. What will the customer be charged?
a. $5,330
b. $3,000
c. $5,759
d. $3,900

31: When considering a process that involves a resource constraint, the optimal decision
A. minimizes the break-even point.
B. minimizes the contribution margin per unit of output.
C. maximizes the contribution margin per unit of the constraint.
D. minimizes total fixed costs.

32: A company has $25 per unit in variable costs and $1,000,000 per year in fixed costs. Demand is estimated to be 100,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?
A) $35
B) $49
C) $27
D) $42

Explanation / Answer

29) b. the original purchase price (ANSWER) 30) charge to the customer = 3000*1.3+ 10*8 + 300*4 +5*30 = 5330 ($) So, a. $5,330 is the ANSWER. 31) A. minimizes the break-even point. (ANSWER) 32) TC = VC + FC (all per unit) => = 25 + 1000000/100000 = 25 10 = 35 ($) SP = 1.4*TC = 1.4* 35 = 49 ($) So, B) $49 is the ANSWER.

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