Dickson Corporation Makes a Product with the Following Costs

question 22

Multiple Choice

Dickson Corporation makes a product with the following costs: The company uses the absorption costing approach to cost-plus pricing described in the text.The pricing calculations are based on budgeted production and sales of 60, 000 units per year. The company has invested $320, 000 in this product and expects a return on investment of 15%.
Direct labor is a variable cost in this company.
If every 10% increase in price leads to a 14% decrease in quantity sold, the profit-maximizing price is closest to:

• A)$84.50
• B)$124.25
• C)$120.90
• D)$117.91

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Definitions:

Statistical Discrimination

The practice of making judgments about individuals based on statistical averages of the group they belong to, rather than on their own specific attributes or performance.

Individual Characteristics

Traits, attributes, or qualities that define or differentiate one person from another.

Wage Discrimination

The practice of paying different wages to employees who perform similar work, based on non-performance-related factors such as race, gender, religion, or national origin.

Discrimination Coefficient

A measure used in various disciplines to quantify the degree of discrimination or bias present in a particular process or decision-making system.