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3 years ago

Why is cost price important in price determination?

Business

2 answers:

wlad13 [49]3 years ago

6 0

Answer:

The cost price is the price you buy a product for. You need to compare the cost price to the selling price to know whether you got a profit or loss (did you make money or did you not).

If you don't know the cost price, you don't know whether you have a profit or loss. Of course everyone wants a profit (make money) so to determine a selling price the cost price is important.

wolverine [178]3 years ago

3 0

answer

The most important factor affecting the price of a product is its cost. ADVERTISEMENTS: Product cost refers to the total of fixed costs, variable costs and semi variable costs incurred during the production, distribution and selling of the product. ... The price for a commodity is determined on the basis of the total cost.

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A company estimates that it will sell 100,000 units of finished goods in March. Each finished good requires 5 feet of raw materi

Lady bird [3.3K]

Answer:

497,000 units

Explanation:

Total production:

= Budgeted production + Desired ending inventory

= (100,000 × 5) + [(9,000 × 5) + 42,000]

= 500,000 + (45,000 + 42,000)

= 500,000 + 87,000

= 587,000

Units to be purchased:

= Total production - Beginning inventory

= 587,000 - [(10,000 × 5) + 40,000]

= 587,000 - (50,000 + 40,000)

= 587,000 - 90,000

= 497,000

Therefore, the raw materials should the company plan to purchase during March is 497,000 units.

4 0

3 years ago

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of th

Rama09 [41]

The selling price of one unit of products less the variable manufacturing expenses is the contribution margin per unit. The amount that each sale contributes to covering fixed costs is known as the contribution margin per unit. It will show the profit per unit sold once the fixed costs have been paid.

<h3>How to find the Contribution margin per unit and Contribution margin per welding hour?</h3>

Computation of Contribution margin per unit (Assuming Direct Labor exists Fixed cost)

Manufactured

Purchased WVD drums WVD drums Bike frames

Selling price $233.00 $233.00 $344.00

Variable costs:

Direct materials $201.00 $52.10 $112.00

Variable manufacturing overhead $0.00 $1.35 $1.90

Variable selling and administrative $0.75 $0.75 $3.40

Total variable cost 201.75 54.2 $117.30

Contribution margin per unit $31.25 $178.80 $226.70

Computation of Contribution margin per welding hour

Manufactured

WVD drums Bike frames

Contribution margin per unit $178.80 $226.70

Welding hours per unit 0.4 0.5

Contribution margin per welding hour $447.00 $453.40

Ranking 2 1

To learn more about contribution margin per unit refer to:

brainly.com/question/15684424

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2 years ago

Return on Assets is a valuable financial measurement because it indicates how profit margin, asset turnover, and the equity mult

erica [24]

Answer:

True

Explanation:

Return on assets (ROA) is she valuable measure in assessing the effectiveness of company management in utilizing company capital. It is calculated

ROA=

Total Assets/

Net Income

where:

Total Assets=Shareholder Equity+Liabilities

Return on assets is closely related to return on equity as they are both almost used for same purpose which is measuring management's effectiveness in capital utilization. Return on equity differs from return on assets by the inclusion or exclusion of the debt factor in calculating them.

The relationship between ROA and ROE is demonstrated in DuPont formula which is given

ROE=profit margin*asset turnover*shareholder equity

4 0

4 years ago

Brown Fashions Inc.'s December 31, 2018 balance sheet showed total common equity of $3,750,000 and 250,000 shares of stock outst

inessss [21]

Answer:

$16

Explanation:

Book Value of Equity = Value of complete equity/no of equity shares

Value of equity share as on 31 Dec 2019 = $3,750,000 + Net income - Dividend

= $3,750,000 + $750,000 - $500,000 = $4,000,000

Net income is a part of common equity, but dividend paid is not part of common equity as dividend paid reduces company's assets as cash or bank balance is reduced.

Provided there is no further issue of common stock and also no common stock is retired. Therefore number of shares = 250,000

Book value per share = $4,000,000/250,000 = $16

$16

5 0

4 years ago

Peter Ittig's department store, Ittig Brothers, is Amherst's largest independent clothier. The store receives an average of

ANTONII [103]

The type of control chart that is best to monitor this process is C-chart.

Explanation:

C-chart helps in determining whether the defects or returns are within the control limits or not.

Given:

Mean = average = 6 per day

Z=3

UcL = mean + 3[square root of mean]

= 6 + 3 (Sq root of 6)

UcL = 13.34

LcL= mean - 3[ square foot of mean] = - 1.34

LcL= -1.34

So the returns are within the control limits.

3 0

3 years ago

Why is cost price important in price determination?​

Why is cost price important in price determination?