Purchase Solution

Managerial Accounting: Return on Pricing

Not what you're looking for?

Ask Custom Question

Hometown Bank is determining the price for its newest mini debit card. The card can be used at any retail outlet with a swipe reader and is small enough to attach to a key chain - no PIN number or signature is required. Sigrid Olmo has developed the following annual information for use in upcoming price determination meetings:

Variable processing costs $ 50 million
Fixed processing costs 36 million
Selling expenses (fixed) 10 million
General and administrative expenses (fixed) 4 million
Desired profit 3 billion
Cost of assets employed 10 billion
Annual usage is expected to be 10 billion transactions.

On average, the company now earns a 6 percent return on assets.
1. Compute the projected cost of one transaction.
2. Using gross margin pricing, compute the price to charge per transaction.
3. Using return on assets pricing, compute the price to charge per transaction.

Purchase this Solution
Solution Summary

The expert examines managerial accounting for return on pricing.

Solution Preview

a. Projected cost of one transaction = total project costs/number of transactions = 0.01
b. ...

Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance

These questions will test you on your knowledge of finance.

Introduction to Finance

This quiz test introductory finance topics.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

View More Free Quizzes
Related BrainMass Solutions

  • Managerial Accounting Travis Corporations

    The expert examines the managerial accounting for Travis Corporations.

  • Transfer Pricing Issues and Measures

    Transfer Pricing 1) What is your opinion on the questions below? Transfer pricing is an important topic from multiple perspectives. It is a global issue affecting taxation, financial results, performance evaluations, and managerial motivation.

  • Accounting in business decision making

    "Managerial Accounting"" Second, internal parties can use a wide range of financial information, much more than external parties, to make decisions.

  • Discussion Regarding Financial Statements

    What types of decisions can be made using managerial accounting? Define, explain, give examples. //The given discussion paper is based on the 'Financial Statement Analysis'.

  • Role of managerial accounting

    Managerial accounting information includes : 1) Costing & Pricing data 2) Budgeting 3) Performance reports 4) Standard and Relevant costing reports Thus it helps in taking important decisions like setting the price of the product.

  • accounting information

    There are many types of accounting information that are important to me and my staff while making decision. The types of accounting information are the financial statements on the day when the accounting information is prepared.

  • Managerial Accounting for Decision-Makers at any Level

    432713 Managerial Accounting for Decision-Makers at any Level 1)How are managerial accounting concepts useful for a decision-maker at any level in an organization?

  • ABC residual income; Transfer pricing; Responsibility ROI

    356779 Managerial: ABC residual income; Transfer pricing; Responsibility for ROI 1) ABC Inc. has the following information available for one of its divisions: Average operating assets $5,000,000 Return on investment (ROI) 40% Sales $8,000,000

  • Cost-Volume-Profit Analysis and Costing Methods

    References; (1)Managerial Accounting For Dummies Mark P. Holtzman John Wiley & Sons, 2013 (2)Managerial Accounting Charles E. Davis, Elizabeth Davis John Wiley & Sons, 2011 The answer to this problem explains cost volume profit analysis.

View More Related Solutions