A Company Incurs $2,700,000 of Overhead Each Year in Three

question 7

Multiple Choice

A company incurs $2,700,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing.The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime.The following data are available: $$\begin{array} { c c r } \text { Denartment } & \text { Expected use of Driver } & \text { Cost } \\\text { Ordering and Receiving } & 2,000 & \$ 800,000 \\\text { Mixing } & 50,000 & 1,000,000 \\\text { Testing } & 1,500 & 900,000\end{array}$$ Production information for Goo is as follows: $$\begin{array} { c c } \text { Department } & \text { Expected use of Driver } \\\hline \text { Ordering and Receiving } & 400 \\\text { Mixing } & 20,000 \\\text { Testing } & 500\end{array}$$
-Compute the amount of overhead assigned to Slime.

• A)$1,350,000
• B)$1,645,234
• C)$1,840,000
• D)$2,025,000

Distinguish between demand-oriented, cost-oriented, profit-oriented, and competition-oriented pricing approaches.

Analyze the role of pricing in positioning a product in the market (e.g., high-quality image).

Understand the concept of price sensitivity and how it affects the success of certain pricing strategies.

Appreciate the psychological aspects of pricing, such as odd-even pricing, and their effects on consumer behavior.

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Definitions:

Intimate Siblings

Siblings who share a very close, personal, and supportive relationship beyond typical fraternal bonds.

Best Friends

Best friends are individuals who share the closest possible friendship, marked by strong bonds of loyalty, trust, and mutual affection.

Confidants

Individuals with whom one shares personal information or secrets, trusted friends or advisers.

Hostile Siblings

Brothers or sisters who show aggression, competition, or animosity towards each other, potentially impacting family dynamics.