Drake Manufacturing Sells a Number of Goods Whose Selling Price

question 65

Multiple Choice

Drake Manufacturing sells a number of goods whose selling price is heavily influenced by cost. A recent study of product no. 520 revealed a traditionally-derived total cost of $1,623 and a selling price of $1,850 based on that figure. A newly computed activity-based total cost is $1,215. Which of the following statements is true?

• A) All other things being equal, Drake should consider increasing its sales price.
• B) Drake should increase the product's selling price to maintain the same markup percentage.
• C) Product no. 520 could be labeled as being overcosted by Drake's traditional costing procedures.
• D) If product no. 520 is undercosted by traditional accounting procedures, then all of Drake's other products must be undercosted as well.
• E) Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure.

---

Definitions:

Power Distance

The extent to which less powerful members of institutions and organizations accept that power is distributed unequally.

Symbolic Elements

Components or aspects of something that represent or stand for something else, often carrying particular meanings or messages.

Shared Emotions

Feelings or emotions experienced collectively by a group of people in response to specific stimuli or events.

Monomyth

A term that represents a common template in narratives around the world, where a hero goes on an adventure, faces a crisis, wins a victory, and then comes home transformed.