Answer the Following Questions Using the Information Below

question 34

Multiple Choice

Answer the following questions using the information below:
Acacia Furniture manufactures rustic furniture.The cost accounting system estimates manufacturing costs to be $140 per table,consisting of 60% variable costs and 40% fixed costs.The company has surplus capacity available.It is Acacia Furniture's policy to add a 50% mark-up to full costs.
-A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style.Acacia Furniture is invited to submit a bid to the hotel chain.What per unit price will Acacia Furniture MOST likely bid on this long-term order?

• A)$108 per unit
• B)$72 per unit
• C)$210 per unit
• D)$140 per unit

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Definitions:

Robinson-Patman Act

A United States federal law aimed at preventing anticompetitive practices by producers, specifically price discrimination.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on factors like location, age, or purchase quantity.

Sunk Cost

A cost that has already been incurred and cannot be recovered.

Intermediate Product

A product that is a result of a process but is also used as an input in the production of a final or finished product.