Reference no: EM132473630
Question 1 - The following per unit information is available for a new product of Red Ribbon Company:
Desired ROI € 20
Fixed cost 40
Variable cost 60
Total cost 100
Selling price 120
What would be Red Ribbon Company's markup percentage?
Question 2 - A company has two divisions: one making components and the other electrical goods. The component division sells a heating ring to the electrical goods division to make kettles but this division can buy a similar component from an outside supplier for £12. The costs of a heating ring made by the component division include a variable cost of £8 and an allocation of overhead costs of £5.
If there is spare capacity in the component division, what should the transfer price be?
a. Below £12
b. Above £8
c. Between £12 and £8
d. Above £12
Question 3 - Management of the Catering Company would like the Food Division to transfer 10,000 cans of its final product to the Restaurant Division for HK$30. The Food Division sells the product to customers for HK$70 per unit. The Food Division's variable cost per unit is HK$35 and its fixed cost per unit is HK$10.
If the Food Division is currently operating at full capacity, what is the minimum transfer price the Food Division should accept?
Question 4 - Management of the Catering Company would like the Food Division to transfer 10,000 cans of its final product to the Restaurant Division for HK$30. The Food Division sells the product to customers for HK$70 per unit. The Food Division's variable cost per unit is HK$35 and its fixed cost per unit is HK$10.
If the Food Division has 10,000 units available capacity, what is the minimum transfer price the Food Division should accept?
Question 5 - Kwan Consulting provides financial consulting and has collected the following data for the next year's budgeted activity for a lead consultant.
Consultants' wages HK$90,000
Fringe benefits HK$22,500
Related overhead HK$17,500
Material supply clerk's wages HK$18,000
Fringe benefits HK$4,000
Related overhead HK$20,000
Profit margin per hour HK$20
Profit margin on materials 15%
Total estimated consulting hours 5,000
Total estimated material costs HK$168,000
How much is the rate charged per hour of labor?
a. HK$42.50
b. HK$26.00
c. HK$41.50
d. HK$46.00
Question 6 - Kwan Consulting provides financial consulting and has collected the following data for the next year's budgeted activity for a lead consultant.
Consultants' wages HK$90,000
Fringe benefits HK$22,500
Related overhead HK$17,500
Material supply clerk's wages HK$18,000
Fringe benefits HK$4,000
Related overhead HK$20,000
Profit margin per hour HK$20
Profit margin on materials 15%
Total estimated consulting hours 5,000
Total estimated material costs HK$168,000
How much is the material handling/loading percentage?
a. 15%
b. 25%
c. 40%
d. 55%
Question 7 - Kwan Consulting provides financial consulting and has collected the following data for the next year's budgeted activity for a lead consultant.
Consultants' wages HK$90,000
Fringe benefits HK$22,500
Related overhead HK$17,500
Material supply clerk's wages HK$18,000
Fringe benefits HK$4,000
Related overhead HK$20,000
Profit margin per hour HK$20
Profit margin on materials 15%
Total estimated consulting hours 5,000
Total estimated material costs HK$168,000
A consulting job takes 20 hours of consulting time and $180 of materials. How much will be the client's bill.
a. HK$1,172
b. HK$772
c. HK$952
d. HK$1,100
Question 8 - Red Grass Company produces high definition television sets. The following information is available for this product:
Fixed cost per unit €250
Variable cost per unit 750
Total cost per unit 1,000
Desired ROI per unit 300
How much is the target selling price for this television?