Total Cost Concept of Product Pricing

Voice Com, Inc., produces and sells cellular phones. The costs of producing and selling 6,000 units of cellular phones are as follows:

Variable costs: Fixed costs:
Direct materials $ 87 per unit Factory overhead $262,000
Direct labor 40 Selling and admin. exp. 92,000
Factory overhead 26
Selling and admin. exp. 21
Total $174 per unit
Voice Com desires a profit equal to a 16% rate of return on invested assets of $681,530.

Assume that Voice Com, Inc., uses the total cost concept of applying the cost-plus approach to product pricing.

a. Determine the total costs and the total cost amount per unit for the production and sale of 6,000 units of cellular phones. Round the cost per unit to two decimal places.

Total cost $
Cost amount per unit $
b. Determine the total cost markup percentage (rounded to two decimal places) for cellular phones.
%

c. Determine the selling price of cellular phones. Round to the nearest cent.
$ per phone

Newton industries is considering a project and has developed the following estimates: unit sales = 4,800, price per unit = $67, variable cost per unit = $42, annual fixed costs = $11,900. the depreciation is $14,700 a year and the tax rate is 34 percent. what effect would an increase of $1 in the selling price have on the operating cash flow?

David burdick is the ceo of acme bubblegum, a successful public company. as one of the cofounders of the company, burdick has enjoyed speaking and writing about the success of acme bubblegum for several years. typically, he speaks at conferences or directly to the press, but recently, he has been blogging about his firm anonymously. specifically, he defended a recent advertising campaign that was unpopular among consumers and pointedly attacked one of acme bubblegum’s competitors. burdick deeply enjoys his anonymous blogging and believes that none of his readers actually know that he works for acme bubblegum. should burdick be allowed to praise his company’s performance anonymously online? should he be allowed to attack his competitors without disclosing his relationship with the company? how would you feel if the ceo of a company at which you shopped was secretly writing criticisms of his or her competition? how would you feel if you knew a writer for your favorite blog was actually closely involved in a company that the blog discussed? 1. define the ethical issue? 2. who are the primary stakeholders? 3. what are the possible alternatives? 4. how could you evaluate the ethical implications of the alternative actions (use appropriate decision rules)? 5. what action would you recommend and why?

Which of the following is a characteristic that can be used to guide the design of service systems? a. services cannot be inventoried. b. services are all similar. c. quality work means quality service. d. services businesses are inherently entrepreneurial. e. even service businesses have internal services.