CHAPTER 22
Pricing
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
1. Compute a target cost when
the market determines a
product price.
1, 2
1
1
1, 2, 3
4. Determine a transfer price
using the negotiated, cost-
based, and market-based
approaches.
11, 12, 13,
14, 15,
16, 17
7, 8, 9
4
11, 12, 13,
14, 15,
16, 17
4A, 5A, 6A
*5. Determine prices using
absorption-cost pricing
18, 19
10, 11
18, 19, 20
7A, 8A
*6. Explain issues involved in
using cost-plus pricing.
3, 4, 5,
6, 7, 8
2
3, 4, 5,
1A, 2A
to determine the cost of
6
3
8, 9, 10
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
BLOOM’ S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of–Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
*1. Compute a target cost when the
market determines a product
price.
Q22-1
Q22-2
BE22-1
DI22-1
E22-1
E22-2
E22-3
*4. Determine a transfer price using
the negotiated, cost-based, and
market-based approaches.
Q22–13
Q22–15
Q22–16
Q22–11
Q22–12
Q22–14
Q22–17
BE22-7 E22–16
BE22-8 E22–17
BE22-9 P22-4A
DI22-4 P22–5A
E22–11 P22–6A
E22–13
E22–14
E22–15
E22–12
E22–18
E22–19
BYP22-4
BYP22-5
BYP22-2
BYP22-3
BYP22-7
BYP22-1
Q22-5
Q22-7
Q22-8
BE22-2
BE22-3
BE22-5
DI22-2
E22-3
E22-5
E22-6
E22-7
P22–1A
P22–2A
E22-9
ANSWERS TO QUESTIONS
1. The first type of pricing environment is where the company is a price taker; that is, the company
9. Time-and-material pricing is most often used in service industries. It involves two pricing rates,
Questions Chapter 22 (Continued)
*11. A transfer price is the price used to record the transfer of goods or services between two divisions
*16. When determining the minimum transfer price, the opportunity cost is the contribution margin
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 22-1
BRIEF EXERCISE 22-2
BRIEF EXERCISE 22-3
BRIEF EXERCISE 22-4
BRIEF EXERCISE 22-5
BRIEF EXERCISE 22-6
BRIEF EXERCISE 22-7
BRIEF EXERCISE 22-8
BRIEF EXERCISE 22-9
*BRIEF EXERCISE 22–10
*BRIEF EXERCISE 22–11
SOLUTIONS TO DO IT! EXERCISES
DO IT! 22-1
DO IT! 22-2
DO IT! 22-3
DO IT! 22-4
SOLUTIONS TO EXERCISES
EXERCISE 22-1
EXERCISE 22-2
EXERCISE 22-3
EXERCISE 22-3 (Continued)
EXERCISE 22-4
EXERCISE 22-5
EXERCISE 22-5 (Continued)
EXERCISE 22-6
EXERCISE 22-7
EXERCISE 22-7 (Continued)
EXERCISE 22-8
Total
=
$195,000
EXERCISE 22-8 (Continued)
EXERCISE 22-9
(b)
Material
Loading
Charges
÷
Total
Invoice Cost,
Parts and
Materials
=
Material
Loading
Percentage
EXERCISE 22-9 (Continued)
EXERCISE 22–10
EXERCISE 22-10 (Continued)
(b)
EXERCISE 22–11
EXERCISE 22-11 (Continued)
EXERCISE 22–12
EXERCISE 22-12 (Continued)
EXERCISE 22–13
EXERCISE 22–14
EXERCISE 22–15
EXERCISE 22–16
EXERCISE 22-16 (Continued)
EXERCISE 22–17
(a) Division Division Total
*EXERCISE 22–18
*EXERCISE 22–19
*EXERCISE 22–20
SOLUTIONS TO PROBLEMS
PROBLEM 22–1A
PROBLEM 22–2A
PROBLEM 22-2A (Continued)
PROBLEM 22–3A
(b) Computation of material loading charge
PROBLEM 22-3A (Continued)
PROBLEM 22–4A
PROBLEM 22–5A
PROBLEM 22–6A
*PROBLEM 22–7A
*PROBLEM 22–8A
Absorption-cost pricing
*PROBLEM 22-8A (Continued)
Variable-cost pricing
*PROBLEM 22-8A (Continued)
CD22 CURRENT DESIGNS
BYP 22-1 DECISION-MAKING ACROSS THE ORGANIZATION
BYP 22-2 MANAGERIAL ANALYSIS
(b) Variable cost per unit
Basic
Wash
Deluxe
Wash
Premium
Wash
expenses
Budgeted
Fixed cost per unit
BYP 22–2 (Continued)
Computation of selling price (45,000 units)
(c)
Revenues
BYP 22-3 REAL-WORLD FOCUS
(a) Pricing in the pharmaceutical industry is complicated by a number of
factors:
BYP 22–3 (Continued)
BYP 22-4 REAL-WORLD FOCUS
BYP 22-5 COMMUNICATION ACTIVITY
To: Jane Fleming
From: Student
Re: Proposal to start business with links to businesses of relatives
The student’s memo should address the following points:
BYP 22-6 ETHICS CASE
(a) The stakeholders in this case are:
BYP 22-7 CONSIDERING YOUR COSTS AND BENEFITS
(c) The five categories of costs used by the authors to evaluate the
Tornado and examples of each type of cost are: