PT ACCESSORY is a company that manufactures mobile accessories, namely: USB data cable, power bank, and stick
Question:
PT ACCESSORY is a company that manufactures mobile accessories, namely: USB data cable, power bank, and stick for taking a photo.
The company operates in a monopolistic market. The manager of PT ACCESSORY applies the concept of cost-plus-pricing.
The concept of cost-plus-pricing is that the selling price per unit of product is calculated by adding up all costs per unit plus a certain amount as the desired profit or margin for the unit. The concept is carried out by means of all product prices subject to a selling price twice the average total cost (ATC). Thus the mark-up for the cost of all products is 100%. Price elasticity of demand for USB data cable, power bank, and stick for taking a photo are -2.5, -1.5 and 2.0, respectively.
Please evaluate by marking up 100%.
Explain whether PT ACCESSORY managers have implemented the cost-plus-pricing method correctly or not and give the reason!
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso