Asistensi Pricing - 10

Problem 1 (Cost-Plus)
PT Fruity sell canned fruit to food distributors. All costs are classified as either manufacturing or
marketing. PT Fruity prepare monthly budgets. The June 2016 budgeted absorption costing income
statement is as follows:
Revenues (1000 crates @$125) $ 125,000
COGS 75,000
Gross Margin 50,000
Marketing Cost 32,500
Operating Income 17,500
Monthly costs are classified as fixed or variable cost (based on number of crates produced for
manufacturing cost, and based on number of crates sold for marketing costs)
Fixed Variable
Manufacturing $ 33,000 $ 42,000
Marketing $ 15,000 $ 17,500
PT Fruity has production capacity of 2000 crates per month.
Required :
a. How much is the markup percentage for PT Fruity if it uses total variable cost as base
b. Assume that a new customer asks PT Fruity to sell 220 crates @$68 per crate for cash. The
customer doesn’t require any marketing effort. Additional manufacturing costs of $4500 will be
required. This transaction is one time only transaction because the customer is believed to be
discontinued in two months period. PT Fruity reluctant to accept this special order because the
price offered by the customer is below the full cost ($75 per crate). Do you agree with this
reasoning?
c. If the customer decides to remain in the business, how this longevity will affect PT Fruity’s
willingness to accept the $ 60 per crate offer?
Problem 2 (Market-Based)
David Service Corporation (DSC) will soon enter a very competitive marketplace in which it will have
limited influence over the prices that are charged. Management and consultants are currently working
to fine-tune the company’s sole service, which they hope will generate a 12% first year return on the
firm’s Rp 300.000.000 assets investment. Although the normal return in DSC’s industry is 15%,
executives are willing to accept the lower figure because of various start-up inefficiencies. The following
information is available for first-year operations:
Hours of service to be provided : 25,000
Anticipated variable cost : Rp 1000
Anticipated fixed cost : Rp 44,750,000 per year.
Required :
a. Calculate the revenue per hour that DSC must generate in the first year to achieve 12% return
on investment
b. Assume that prior to the start of business in year 1, management conducted a planning exercise
to determine if DSC could attain a 15% return on its investment in year 2. Can the company
achieve this return if competitive pressures dictate a maximum selling price of Rp 4500 per
hour, assuming that DSC cannot reduce its fixed and variable costs, and the service hours is the
same as the first year.
Problem 3: Life Cycle Operating Income
Knowledge Transfer Associates is in the process of evaluating its new client services for the business
systems consulting division.
• Server Planning, a new service, incurred $250,000 in development costs.
• The direct costs of providing the service, which is all labor, averages $50 per hour.
• Other costs for this service are estimated at $300,000 per year.
• The current program for server planning is expected to last for two years. At that time, expected new
operating systems are likely to make the service non viable.
• Customer service expenses average $250 per client, with each job lasting an average of 40 hours. The
current staff expects to bill 15,000 hours for each of the two years the program is in effect. Billing
averages $90 per hour.
What is the estimated life-‐-cycle operating income for both years combined?
A) $206,250
B) $162,500
C) $(43,750)
D) $(87,500)
HOMEWORK
Answer questions 1 – 4 using the information below:

Wilde Corporation budgeted the following costs for the production of its one and only product for the
next fiscal year:
Direct materials $1,125,000
Direct labor 775,000
Manufacturing overhead
Variable 840,000
Fixed 645,000
Selling and administrative
Variable 360,000
Fixed 480,000
Total costs $4,225,000
Wilde has an annual target operating income of $900,000.
1) The markup percentage for setting prices as a percentage of total manufacturing costs is ________.
A) 51.4%
B) 125.3%
C) 185.6%
D) 245.8%
2) The markup percentage for setting prices as a percentage of variable manufacturing costs is ________.
A) 51.40%
B) 87.04%
C) 65.30%
D) 21.30%
3) The markup percentage for setting prices as a percentage of the variable cost of the product is
________.
A) 328.9%
B) 36.6%
C) 228.5%
D) 65.3%
4) The markup percentage for setting prices as a percentage of the full cost of the product is ________.
A) 328.9%
B) 36.6%
C) 228.5%
D) 21.3%
Answer: D
5) Sail Safe currently sells motor boats for $60,000. It has costs of $46,500. A competitor is bringing a new
motor boat to the market that will sell for $55,000. Management believes it must lower the price to $55,000
to compete in the market for motor boats. The marketing department believes that the new price will
cause sales to increase by 12.5%, even with a new competitor in the market. Sail Safe'ʹs sales are currently
2,000 motor boats per year. 3
Required:
a. What is the target cost for the new target price if target operating income is 20% of sales?
b. What is the change in operating income if marketing department is correct and only the sales price is
changed?
c. What is the target cost if the company wants to maintain its same income level, and marketing
department is correct?

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Problem 1 (Cost-Plus)

Revenues (1000 crates @$125) $ 125,000

Gross Margin 50,000

Marketing Cost 32,500

Operating Income 17,500

Manufacturing $ 33,000 $ 42,000

Marketing $ 15,000 $ 17,500

PT Fruity has production capacity of 2000 crates per month.

Hours of service to be provided : 25,000

Anticipated variable cost : Rp 1000

Anticipated fixed cost : Rp 44,750,000 per year.

Problem 3: Life Cycle Operating Income

systems consulting division.

• Server Planning, a new service, incurred $250,000 in development costs.

Answer questions 1 – 4 using the information below:

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