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Morice Industries Inc. has developed a new injection mold, model IA-05, that is designed to offer superior performance to a comparable injection mold sold by Morice's main competitor. The competing injection mold sells for $54,000 and needs to be replaced after 1,000 hours of use. It also requires $7,000 of preventive maintenance during its useful life. Model IA-05's performance capabilities are similar to the competing product with two important exceptions-it needs to be replaced only after 2,000 hours of use and it requires $8,000 of preventive maintenance during its useful life. -From a value-based pricing standpoint what range of possible prices should Morice consider when setting a price for model IA-05?


A) $54,000 ≤ Value-based price ≤ $114,000
B) $54,000 ≤ Value-based price ≤ $108,000
C) $60,000 ≤ Value-based price ≤ $114,000
D) $60,000 ≤ Value-based price ≤ $108,000

E) B) and C)
F) A) and D)

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Kinsley Corporation manufactures numerous products, one of which is called Kappa03. The company has provided the following data about this product: Kinsley Corporation manufactures numerous products, one of which is called Kappa03. The company has provided the following data about this product: -Management is considering increasing the price of Kappa03 by 7%,from $36.00 to $38.52.The company's marketing managers estimate that this price hike would decrease unit sales by 10%,from 50,000 units to 45,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will product Kappa03 earn at a price of $38.52 if this sales forecast is correct? A) $626,000 B) $563,400 C) $156,000 D) $93,400 -Management is considering increasing the price of Kappa03 by 7%,from $36.00 to $38.52.The company's marketing managers estimate that this price hike would decrease unit sales by 10%,from 50,000 units to 45,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will product Kappa03 earn at a price of $38.52 if this sales forecast is correct?


A) $626,000
B) $563,400
C) $156,000
D) $93,400

E) C) and D)
F) All of the above

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The management of Musselman Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product: The management of Musselman Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product: Management plans to produce and sell 9,000 units of the new product annually. The new product would require an investment of $1,305,000 and has a required return on investment of 10%. -The markup percentage on absorption cost is closest to: A) 25% B) 34% C) 15% D) 10% Management plans to produce and sell 9,000 units of the new product annually. The new product would require an investment of $1,305,000 and has a required return on investment of 10%. -The markup percentage on absorption cost is closest to:


A) 25%
B) 34%
C) 15%
D) 10%

E) A) and D)
F) None of the above

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Chruch Corporation manufactures numerous products, one of which is called Tau42. The company has provided the following data about this product: Chruch Corporation manufactures numerous products, one of which is called Tau42. The company has provided the following data about this product: -From a value-based pricing standpoint what is the differentiation value offered byGZ-29 relative to the competitor's offering for each 30,000 hours of service? A) $245,000 B) $205,000 C) $72,000 D) $370,000 -From a value-based pricing standpoint what is the differentiation value offered byGZ-29 relative to the competitor's offering for each 30,000 hours of service?


A) $245,000
B) $205,000
C) $72,000
D) $370,000

E) B) and C)
F) A) and C)

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Herrell Corporation manufactures numerous products, one of which is called Delta11. The company has provided the following data about this product: Herrell Corporation manufactures numerous products, one of which is called Delta11. The company has provided the following data about this product: -Management is considering increasing the price of Delta11 by 5%,from $29.00 to $30.45.The company's marketing managers estimate that this price hike would decrease unit sales by 10%,from 110,000 units to 99,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will product Delta11 earn at a price of $30.45 if this sales forecast is correct? A) $1,133,550 B) $123,550 C) $249,500 D) $1,259,500 -Management is considering increasing the price of Delta11 by 5%,from $29.00 to $30.45.The company's marketing managers estimate that this price hike would decrease unit sales by 10%,from 110,000 units to 99,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will product Delta11 earn at a price of $30.45 if this sales forecast is correct?


A) $1,133,550
B) $123,550
C) $249,500
D) $1,259,500

E) All of the above
F) A) and B)

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Morr Logistic Solutions Corporation has developed a new forklift-model QY-49-that has been designed to outperform a competitor's best-selling forklift. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $3.70 per hour, and sells for $109,000. In contrast, model QY-49 has a useful life of 40,000 hours of service and its operating cost is $2.10 per hour. Morr has not yet established a selling price for model QY-49. -From a value-based pricing standpoint what is QY-49's economic value to the customer over its 40,000 hour useful life?


A) $500,000
B) $193,000
C) $146,000
D) $391,000

E) None of the above
F) All of the above

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Tavis Robotics Corporation has developed a new robot-model FI-73-that has been designed to outperform a competitor's best-selling robot. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $4.60 per hour, and sells for $109,000. In contrast, model FI-73 has a useful life of 30,000 hours of service and its operating cost is $2.60 per hour. Tavis has not yet established a selling price for model FI-73. -From a value-based pricing standpoint what is the reference value that Tavis should consider when pricing model FI-73?


A) $155,000
B) $109,000
C) $187,000
D) $327,000

E) None of the above
F) A) and B)

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Gama Avionics Corporation has developed a new high pressure pump-model SF-22-that has been designed to outperform a competitor's best-selling high pressure pump.The competitor's product has a useful life of 30,000 hours of service,has operating costs that average $1.70 per hour,and sells for $109,000.In contrast,model SF-22 has a useful life of 60,000 hours of service and its operating cost is $1.10 per hour.Gama has not yet established a selling price for model SF-22. Required: From a value-based pricing standpoint what is model SF-22's economic value to the customer over its 60,000 hour useful life?

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The economic value to the customer (EVC)...

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Hilfiger Industries Inc.has developed a new forklift,model UH-40,that is designed to offer superior performance to a comparable forklift sold by Hilfiger's main competitor.The competing forklift sells for $96,000 and needs to be replaced after 1,000 hours of use.It also requires $9,000 of preventive maintenance during its useful life.Model UH-40's performance capabilities are similar to the competing product with two important exceptions-it needs to be replaced only after 2,000 hours of use and it requires $13,000 of preventive maintenance during its useful life. From a value-based pricing standpoint what is model UH-40's economic value to the customer over its 2,000 hour life?


A) $114,000
B) $197,000
C) $101,000
D) $192,000

E) A) and C)
F) A) and D)

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Secore Robotics Corporation has developed a new robot-model TR-53-that has been designed to outperform a competitor's best-selling robot.The competitor's product has a useful life of 20,000 hours of service,has operating costs that average $1.30 per hour,and sells for $109,000.In contrast,model TR-53 has a useful life of 100,000 hours of service and its operating cost is $0.80 per hour.Secore has not yet established a selling price for model TR-53. From a value-based pricing standpoint what is the reference value that Secore should consider when pricing model TR-53?


A) $189,000
B) $135,000
C) $545,000
D) $109,000

E) A) and B)
F) B) and C)

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Target costing is primarily used with well-established products.

A) True
B) False

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Chruch Corporation manufactures numerous products, one of which is called Tau42. The company has provided the following data about this product: Chruch Corporation manufactures numerous products, one of which is called Tau42. The company has provided the following data about this product: -Assume that the total traceable fixed expense does not change.If Chruch decreases the price of Tau42 to $60.16,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $64.00? (Your answer should be rounded to the nearest 0.1%.) A) 15.5% B) 23.8% C) -6.7% D) -10.0% -Assume that the total traceable fixed expense does not change.If Chruch decreases the price of Tau42 to $60.16,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $64.00? (Your answer should be rounded to the nearest 0.1%.)


A) 15.5%
B) 23.8%
C) -6.7%
D) -10.0%

E) A) and D)
F) C) and D)

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Home Products,Inc.,is planning the introduction of a new food dryer.To compete effectively,the dryer would have to be priced at no more than $40 per unit.An investment of $600,000 would have to be made in order to produce and sell the new dryer.The company requires a return on investment of at least 25% on new products.Assuming that the company expects to produce and sell 30,000 dryers per year,the target cost per dryer would be closest to:


A) $18.00
B) $35.00
C) $20.00
D) $24.67

E) A) and C)
F) A) and B)

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Spach Corporation manufactures numerous products, one of which is called Beta68. The company has provided the following data about this product: Spach Corporation manufactures numerous products, one of which is called Beta68. The company has provided the following data about this product: -Management is considering decreasing the price of Beta68 by 5%,from $16.00 to $15.20.The company's marketing managers estimate that this price reduction would increase unit sales by 10%,from 110,000 units to 121,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will product Beta68 earn at a price of $15.20 if this sales forecast is correct? A) $629,200 B) $572,000 C) -$8,000 D) $49,200 -Management is considering decreasing the price of Beta68 by 5%,from $16.00 to $15.20.The company's marketing managers estimate that this price reduction would increase unit sales by 10%,from 110,000 units to 121,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will product Beta68 earn at a price of $15.20 if this sales forecast is correct?


A) $629,200
B) $572,000
C) -$8,000
D) $49,200

E) A) and D)
F) B) and D)

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Twisdale Corporation manufactures numerous products, one of which is called Omicron52. The company has provided the following data about this product: Twisdale Corporation manufactures numerous products, one of which is called Omicron52. The company has provided the following data about this product: -What is the net operating income for product Omicron52 at the current price? A) $6,720,000 B) $4,650,000 C) $330,000 D) $2,400,000 -What is the net operating income for product Omicron52 at the current price?


A) $6,720,000
B) $4,650,000
C) $330,000
D) $2,400,000

E) B) and C)
F) None of the above

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The management of Musselman Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product: The management of Musselman Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product: Management plans to produce and sell 9,000 units of the new product annually. The new product would require an investment of $1,305,000 and has a required return on investment of 10%. -The absorption costing unit product cost is: A) $51 B) $54 C) $75 D) $86 Management plans to produce and sell 9,000 units of the new product annually. The new product would require an investment of $1,305,000 and has a required return on investment of 10%. -The absorption costing unit product cost is:


A) $51
B) $54
C) $75
D) $86

E) A) and B)
F) C) and D)

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Alway Candy Corporation is implementing a target costing approach for its latest new product,the "Big Glob" candy bar.The following information relates to the Big Glob: Alway Candy Corporation is implementing a target costing approach for its latest new product,the Big Glob candy bar.The following information relates to the Big Glob: Based on this information,what is Alway's target selling price per bar for the Big Glob? A) $0.70 B) $0.72 C) $0.75 D) $0.80 Based on this information,what is Alway's target selling price per bar for the Big Glob?


A) $0.70
B) $0.72
C) $0.75
D) $0.80

E) A) and B)
F) A) and C)

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Tavis Robotics Corporation has developed a new robot-model FI-73-that has been designed to outperform a competitor's best-selling robot. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $4.60 per hour, and sells for $109,000. In contrast, model FI-73 has a useful life of 30,000 hours of service and its operating cost is $2.60 per hour. Tavis has not yet established a selling price for model FI-73. -From a value-based pricing standpoint what range of possible prices should Tavis consider when setting a price for FI-73?


A) $187,000 ≤ Value-based price ≤ $278,000
B) $109,000 ≤ Value-based price ≤ $187,000
C) $109,000 ≤ Value-based price ≤ $387,000
D) $278,000 ≤ Value-based price ≤ $387,000

E) A) and C)
F) A) and D)

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Weitman Corporation manufactures numerous products, one of which is called Epsilon50. The company has provided the following data about this product: Weitman Corporation manufactures numerous products, one of which is called Epsilon50. The company has provided the following data about this product: -Assume that the total traceable fixed expense does not change.How many units of product Epsilon50 would Weitman need to sell at a price of $31.61 to earn the same net operating income that it currently earns at a price of $29.00? (Round your answer up to the nearest whole number.) A) 105,070 B) 116,364 C) 110,500 D) 94,048 -Assume that the total traceable fixed expense does not change.How many units of product Epsilon50 would Weitman need to sell at a price of $31.61 to earn the same net operating income that it currently earns at a price of $29.00? (Round your answer up to the nearest whole number.)


A) 105,070
B) 116,364
C) 110,500
D) 94,048

E) A) and B)
F) B) and D)

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Maccarone Corporation manufactures numerous products,one of which is called Tau10.The company has provided the following data about this product: Maccarone Corporation manufactures numerous products,one of which is called Tau10.The company has provided the following data about this product: Required: a.What net operating income is the company earning now on its sales of Tau10? b.Management is considering decreasing the price of Tau10 by 5%,from $36.00 to $34.20.The company's marketing managers estimate that this price reduction would increase unit sales by 10%,from 130,000 units to 143,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will Tau10 earn at a price of $34.20 if this sales forecast is correct? c.Assuming that the total traceable fixed expense does not change,if Maccarone decreases the price of Tau10 to $34.20,what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $36.00? (Round your answer to the nearest one-tenth of a percent.) Required: a.What net operating income is the company earning now on its sales of Tau10? b.Management is considering decreasing the price of Tau10 by 5%,from $36.00 to $34.20.The company's marketing managers estimate that this price reduction would increase unit sales by 10%,from 130,000 units to 143,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will Tau10 earn at a price of $34.20 if this sales forecast is correct? c.Assuming that the total traceable fixed expense does not change,if Maccarone decreases the price of Tau10 to $34.20,what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $36.00? (Round your answer to the nearest one-tenth of a percent.)

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a.
blured image b.The profit at the price of $34.20...

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