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Multiple Choice Quiz
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1
The management of Louwers Company's management believes that an 8% decrease in total unit sales will result from every 5% increase in the selling price of one of the company's products. The product's price elasticity of demand, as defined in the text, is closest to:
A)-2.41
B)-1.99
C)-1.71
D)-1.25
2
The management of Malibu Company expects that a 10% decrease in total unit sales will result from every 9% increase in the selling price of one of the company's products. The variable production cost of this product is $25.20 per unit and the variable selling and administrative cost is $9.80 per unit. The product's profit-maximizing price, according to the formula in the text, is closest to:
A)$208.40
B)$192.94
C)$41.66
D)$5.49
3
Goldenleaf 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:

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The company uses the absorption costing approach to cost-plus pricing described in the text. The percentage markup being used to determine the selling price for the product is:
A)100.0%
B)60.0%
C)40.0%
D)37.5%
4
Celeste, Inc. 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. The selling price based on the absorption costing approach described in the text would be closest to:
A)$108.04
B)$73.90
C)$73.10
D)$47.29
5
Shatner Company, a manufacturer of umbrellas, wants to introduce a smaller umbrella designed for travel. To compete effectively, the umbrella 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 umbrellas each year, the company will need to make an investment of $800,000. The target cost per umbrella would be:
A)$15.50
B)$14.00
C)$12.50
D)$1.50





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