ABC Company's management believes that every 9% increase inthe selling price of one of the company's products results in a 10%decrease in the product's total unit sales. The variable productioncost of this product is P12.60 per unit and the variable selling andadministrative cost is P4.90 per unit.1 The product's profit-maximizing price according to the formula inthe text is closest to:a. P104.20b. P19.11C. P20.83d. P96.12ABC, Inc., uses the absorption costing approach to cost-plus pricingdescribed in the text to set prices for its products. Based onbudgeted sales of 45,000 units next year, the unit product cost of aparticular product is P15.60. The company's selling, general, andadministrative expenses for this product are budgeted to beP1,035,000 in total for the year. The company has investedP280,000 in this product and expects a return on investment of11%.2) The selling price for this product based on the absorption costingapproach would be closest to:a. P39.28b. P17.32C. P97.20d. P38.60

Selling price increases = 9% production fall by = 10% Variable Cost = 12.60/unit administrative cost…

ABC Company's management believes that every 9% increase in the selling price of one of the company's products results in a 10% decrease in the product's total unit sales. The variable production cost of this product is P12.60 per unit and the variable selling and administrative cost is P4.90 per unit. 1 The product's profit-maximizing price according to the formula in the text is closest to: a. P104.20 b. P19.11 C. P20.83 d. P96.12 ABC Inc

ABC Company's management believes that every 9% increase in the selling price of one of the company's products results in a 10% decrease in the product's total unit sales. The variable production cost of this product is P12.60 per unit and the variable selling and administrative cost is P4.90 per unit. 1 The product's profit-maximizing price according to the formula in the text is closest to: a. P104.20 b. P19.11 C. P20.83 d. P96.12 ABC Inc

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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