Chapter 7 pricing

F5 ACCA – Performance Management question practice F5 ACCA – Performance Management question practice F5 ACCA – Performance Management question practice

Prepared for Educational Purposes

August 15, 2025

Contents

1

1 Part 1: List of Questions

This section contains 50 multiple-choice questions based on Pricing, focusing on absorp-tion costing, price-demand equaabsorp-tions, profit maximizaabsorp-tion, and pricing policies Numbers are left-aligned from 1 to 50

1 A product has a materials cost of $10 per unit, a labour cost of $8 per unit, variable overheads of $3, and fixed overheads of $5 per unit The company uses absorption costing and has a policy of pricing so as to make a gross profit margin of 20% What should be the selling price per unit for the product?

a $25.20

b $32.50

c $26.25

d $31.20

2 At a selling price of $25 per unit, the demand for a product is 20,000 units The demand will change by 2,000 units for every $5 change in the selling price Which of the following is the correct price demand equation for this product?

a P = 30 - 0.0025Q

b P = 75 + 0.0025Q

c P = 75 - 0.0025Q

d P = 30 + 0.0025Q

3 At a selling price of $200, the demand will be 100,000 units per annum The demand will change by 10,000 units for every $30 change in the selling price The fixed costs are $60,000 per annum, and the variable costs $8 per unit At what selling price per unit will the profit be maximised?

a $300 per unit

b $426 per unit

c $254 per unit

d $245 per unit

4 A company selling soft drinks runs a promotional campaign, during which they sell their products at a large discount The campaign will last for 2 weeks This is an example of which of the following pricing policies?

a Penetration pricing

b Volume discounting

c Price skimming

d Differential pricing

5 A computer manufacturer gives a discount to customers who are in full-time education This is an example of which of the following pricing policies?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

6 A product has a materials cost of $15, labour cost of $10, variable overheads of $5, and fixed overheads of $4 per unit Using absorption costing with a 25% gross profit margin, what is the selling price per unit?

a $34.00

b $45.33

c $40.00

d $48.00

7 At a selling price of $50, demand is 10,000 units Demand changes by 1,000 units for every $4 change in price What is the price-demand equation?

a P = 90 - 0.004Q

b P = 90 + 0.004Q

c P = 50 - 0.004Q

d P = 50 + 0.004Q

8 At a selling price of $150, demand is 50,000 units Demand changes by 5,000 units for every $20 change in price Fixed costs are $100,000, and variable costs are $10 per unit What is the profit-maximizing price?

a $180

b $190

c $200

d $210

9 A company offers a lower price to enter a new market and gain market share This is

an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

10 A retailer charges higher prices for a product during peak seasons This is an example

of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

11 A product has a materials cost of $12, labour cost of $9, variable overheads of $4, and fixed overheads of $6 per unit Using absorption costing with a 30% gross profit margin, what is the selling price per unit?

a $31.00

b $44.29

c $40.00

d $47.50

12 At a selling price of $30, demand is 15,000 units Demand changes by 3,000 units for every $6 change in price What is the price-demand equation?

a P = 60 - 0.002Q

b P = 60 + 0.002Q

c P = 30 - 0.002Q

d P = 30 + 0.002Q

13 At a selling price of $100, demand is 80,000 units Demand changes by 4,000 units for every $10 change in price Fixed costs are $50,000, and variable costs are $5 per unit What is the profit-maximizing price?

a $125

b $135

c $145

d $155

14 A company launches a new product at a high price to target early adopters This is

an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

15 A supermarket offers a discount for buying multiple units of a product This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

16 A product has a materials cost of $20, labour cost of $15, variable overheads of $5, and fixed overheads of $10 per unit Using absorption costing with a 15% gross profit margin, what is the selling price per unit?

a $50.00

b $58.82

c $55.00

d $60.00

17 At a selling price of $40, demand is 25,000 units Demand changes by 5,000 units for every $8 change in price What is the price-demand equation?

a P = 80 - 0.0016Q

b P = 80 + 0.0016Q

c P = 40 - 0.0016Q

d P = 40 + 0.0016Q

18 At a selling price of $250, demand is 60,000 units Demand changes by 6,000 units for every $25 change in price Fixed costs are $80,000, and variable costs are $12 per unit What is the profit-maximizing price?

a $281

b $291

c $301

d $311

19 A company charges different prices for the same product in different countries This

is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

20 A company offers a discount to loyal customers This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

21 A product has a materials cost of $8, labour cost of $6, variable overheads of $2, and fixed overheads of $4 per unit Using absorption costing with a 10% gross profit margin, what is the selling price per unit?

a $20.00

b $22.22

c $24.00

d $26.00

22 At a selling price of $20, demand is 30,000 units Demand changes by 2,000 units for every $3 change in price What is the price-demand equation?

a P = 50 - 0.0015Q

b P = 50 + 0.0015Q

c P = 20 - 0.0015Q

d P = 20 + 0.0015Q

23 At a selling price of $300, demand is 40,000 units Demand changes by 5,000 units for every $15 change in price Fixed costs are $70,000, and variable costs are $15 per unit What is the profit-maximizing price?

a $315

b $325

c $335

d $345

24 A company sets a low initial price to attract customers in a competitive market This

is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

25 A company charges a premium for express delivery This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

26 A product has a materials cost of $25, labour cost of $20, variable overheads of $10, and fixed overheads of $5 per unit Using absorption costing with a 35% gross profit margin, what is the selling price per unit?

a $60.00

b $92.31

c $80.00

d $100.00

27 At a selling price of $60, demand is 12,000 units Demand changes by 1,500 units for every $5 change in price What is the price-demand equation?

a P = 90 - 0.0033Q

b P = 90 + 0.0033Q

c P = 60 - 0.0033Q

d P = 60 + 0.0033Q

28 At a selling price of $180, demand is 70,000 units Demand changes by 7,000 units for every $20 change in price Fixed costs are $90,000, and variable costs are $10 per unit What is the profit-maximizing price?

a $195

b $205

c $215

d $225

29 A company offers a discount for bulk purchases This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

30 A company sets a high price for a new innovative product This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

31 A product has a materials cost of $18, labour cost of $12, variable overheads of $6, and fixed overheads of $8 per unit Using absorption costing with a 40% gross profit margin, what is the selling price per unit?

a $44.00

b $73.33

c $60.00

d $80.00

32 At a selling price of $35, demand is 18,000 units Demand changes by 2,500 units for every $5 change in price What is the price-demand equation?

a P = 65 - 0.002Q

b P = 65 + 0.002Q

c P = 35 - 0.002Q

d P = 35 + 0.002Q

33 At a selling price of $220, demand is 90,000 units Demand changes by 8,000 units for every $25 change in price Fixed costs are $120,000, and variable costs are $20 per unit What is the profit-maximizing price?

a $245

b $255

c $265

d $275

34 A company charges different prices for online and in-store purchases This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

35 A company offers a discount to first-time buyers This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

36 A product has a materials cost of $14, labour cost of $10, variable overheads of $4, and fixed overheads of $2 per unit Using absorption costing with a 15% gross profit margin, what is the selling price per unit?

a $30.00

b $35.29

c $40.00

d $45.00

37 At a selling price of $45, demand is 22,000 units Demand changes by 3,000 units for every $6 change in price What is the price-demand equation?

a P = 78 - 0.002Q

b P = 78 + 0.002Q

c P = 45 - 0.002Q

d P = 45 + 0.002Q

38 At a selling price of $260, demand is 55,000 units Demand changes by 5,000 units for every $20 change in price Fixed costs are $110,000, and variable costs are $15 per unit What is the profit-maximizing price?

a $285

b $295

c $305

d $315

39 A company sets a low price to compete in a saturated market This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

40 A company charges a premium for customized products This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

41 A product has a materials cost of $16, labour cost of $14, variable overheads of $5, and fixed overheads of $3 per unit Using absorption costing with a 25% gross profit margin, what is the selling price per unit?

a $38.00

b $50.67

c $45.00

d $55.00

42 At a selling price of $55, demand is 16,000 units Demand changes by 2,000 units for every $5 change in price What is the price-demand equation?

a P = 85 - 0.0025Q

b P = 85 + 0.0025Q

c P = 55 - 0.0025Q

d P = 55 + 0.0025Q

43 At a selling price of $240, demand is 65,000 units Demand changes by 6,000 units for every $15 change in price Fixed costs are $100,000, and variable costs are $18 per unit What is the profit-maximizing price?

a $265

b $275

c $285

d $295

44 A company offers a discount during a holiday sale This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

45 A company sets a high price for a limited-edition product This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

46 A product has a materials cost of $22, labour cost of $18, variable overheads of $6, and fixed overheads of $4 per unit Using absorption costing with a 30% gross profit margin, what is the selling price per unit?

a $50.00

b $71.43

c $60.00

d $80.00

47 At a selling price of $70, demand is 14,000 units Demand changes by 1,000 units for every $4 change in price What is the price-demand equation?

a P = 98 - 0.004Q

b P = 98 + 0.004Q

c P = 70 - 0.004Q

d P = 70 + 0.004Q

48 At a selling price of $270, demand is 45,000 units Demand changes by 4,000 units for every $10 change in price Fixed costs are $80,000, and variable costs are $12 per unit What is the profit-maximizing price?

a $295

b $305

c $315

d $325

49 A company offers a discount to senior citizens This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

50 A company sets a low price to clear excess inventory This is an example of which pricing policy?

a Differential pricing

b Penetration pricing

c Price skimming

d Volume discounting

2 Part 2: Answers with Detailed Explanations

1 b $32.50 Explanation: Total cost = $10 + $8 + $3 + $5 = $26 For 20% gross

profit margin: S −26 S = 0.2 Solve: S = 0.826 = $32.50.

2 c P = 75 - 0.0025Q Explanation: At P = $25, Q = 20,000 Slope = 5

2000 = 0.0025 Equation: 25 = a − 0.0025 × 20, 000, a = 75 Thus, P = 75 − 0.0025Q.

3 c $254 Explanation: At P = $200, Q = 100,000 Slope = 10,000 −30 = −0.003

Equa-tion: P = 500 − 0.003Q Profit = (500Q − 0.003Q2)− (60, 000 + 8Q) Maximize:

dπ

dQ = 492− 0.006Q = 0, Q = 82,000 Price = 500 − 0.003 × 82, 000 = $254.

4 d Differential pricing Explanation: A temporary promotional discount is

differen-tial pricing, varying prices by time

5 a Differential pricing Explanation: Discounts for students are differential pricing,

targeting a specific segment

6 b $45.33 Explanation: Total cost = $15 + $10 + $5 + $4 = $34 For 25% margin:

S −34

S = 0.25, S = 0.7534 ≈ $45.33.

7 a P = 90 - 0.004Q Explanation: At P = $50, Q = 10,000 Slope = 10004 = 0.004 Equation: 50 = a − 0.004 × 10, 000, a = 90 Thus, P = 90 − 0.004Q.

8 b $190 Explanation: At P = $150, Q = 50,000 Slope = 5000−20 =−0.004 Equation:

P = 350 − 0.004Q Profit = (350Q − 0.004Q2)− (100, 000 + 10Q) Maximize: dπ

dQ =

340− 0.008Q = 0, Q = 42,500 Price = 350 − 0.004 × 42, 500 = $190.

9 b Penetration pricing Explanation: Low price to gain market share is penetration

pricing

10 a Differential pricing Explanation: Higher prices during peak seasons are

differen-tial pricing

11 b $44.29 Explanation: Total cost = $12 + $9 + $4 + $6 = $31 For 30% margin:

S −31

S = 0.3, S = 0.731 ≈ $44.29.

12 a P = 60 - 0.002Q Explanation: At P = $30, Q = 15,000 Slope = 30006 = 0.002 Equation: 30 = a − 0.002 × 15, 000, a = 60 Thus, P = 60 − 0.002Q.

13 c $145 Explanation: At P = $100, Q = 80,000 Slope = 4000−10 =−0.0025 Equation:

P = 300 − 0.0025Q Profit = (300Q − 0.0025Q2)− (50, 000 + 5Q) Maximize: dπ

dQ =

295− 0.005Q = 0, Q = 59,000 Price = 300 − 0.0025 × 59, 000 = $145.

14 c Price skimming Explanation: High price for early adopters is price skimming.

15 d Volume discounting Explanation: Discounts for multiple units are volume

dis-counting

16 b $58.82 Explanation: Total cost = $20 + $15 + $5 + $10 = $50 For 15% margin:

S −50

S = 0.15, S = 0.8550 ≈ $58.82.

17 a P = 80 - 0.0016Q Explanation: At P = $40, Q = 25,000 Slope = 50008 = 0.0016 Equation: 40 = a − 0.0016 × 25, 000, a = 80 Thus, P = 80 − 0.0016Q.

18 b $291 Explanation: At P = $250, Q = 60,000 Slope = 6000−25 ≈ −0.004167.

Equation: P = 500 − 0.004167Q Profit = (500Q − 0.004167Q2)− (80, 000 + 12Q).

Maximize: dQ dπ = 488−0.008334Q = 0, Q = 58,560 Price = 500−0.004167×58, 560 ≈

$291

19 a Differential pricing Explanation: Different prices by country are differential

pricing

20 a Differential pricing Explanation: Discounts for loyal customers are differential

pricing

21 b $22.22 Explanation: Total cost = $8 + $6 + $2 + $4 = $20 For 10% margin:

S −20

S = 0.1, S = 0.920 ≈ $22.22.

22 a P = 50 - 0.0015Q Explanation: At P = $20, Q = 30,000 Slope = 20003 = 0.0015 Equation: 20 = a − 0.0015 × 30, 000, a = 50 Thus, P = 50 − 0.0015Q.

23 b $325 Explanation: At P = $300, Q = 40,000 Slope = 5000−15 =−0.003 Equation:

P = 420 − 0.003Q Profit = (420Q − 0.003Q2)− (70, 000 + 15Q) Maximize: dπ

dQ =

405− 0.006Q = 0, Q = 67,500 Price = 420 − 0.003 × 67, 500 = $325.

24 b Penetration pricing Explanation: Low price in a competitive market is

penetra-tion pricing

25 a Differential pricing Explanation: Premium for express delivery is differential

pricing

26 b $92.31 Explanation: Total cost = $25 + $20 + $10 + $5 = $60 For 35% margin:

S −60

S = 0.35, S = 0.6560 ≈ $92.31.

27 a P = 90 - 0.0033Q Explanation: At P = $60, Q = 12,000 Slope = 15005 ≈ 0.0033.

Equation: 60 = a − 0.0033 × 12, 000, a = 90 Thus, P = 90 − 0.0033Q.

28 c $215 Explanation: At P = $180, Q = 70,000 Slope = 7000−20 ≈ −0.002857.

Equation: P = 380 − 0.002857Q Profit = (380Q − 0.002857Q2)− (90, 000 + 10Q).

Maximize: dQ dπ = 370−0.005714Q = 0, Q = 64,750 Price = 380−0.002857×64, 750 ≈

$215

29 d Volume discounting Explanation: Discounts for bulk purchases are volume

dis-counting

30 c Price skimming Explanation: High price for innovative products is price

skim-ming

31 b $73.33 Explanation: Total cost = $18 + $12 + $6 + $8 = $44 For 40% margin:

S −44

S = 0.4, S = 0.644 ≈ $73.33.

32 a P = 65 - 0.002Q Explanation: At P = $35, Q = 18,000 Slope = 5

2500 = 0.002 Equation: 35 = a − 0.002 × 18, 000, a = 65 Thus, P = 65 − 0.002Q.

33 c $265 Explanation: At P = $220, Q = 90,000 Slope = 8000−25 = −0.003125.

Equation: P = 445 − 0.003125Q Profit = (445Q − 0.003125Q2)− (120, 000 + 20Q).

Maximize: dQ dπ = 425−0.00625Q = 0, Q = 68,000 Price = 445−0.003125×68, 000 =

$265

34 a Differential pricing Explanation: Different prices for online and in-store purchases

are differential pricing

35 a Differential pricing Explanation: Discounts for first-time buyers are differential

pricing

36 b $35.29 Explanation: Total cost = $14 + $10 + $4 + $2 = $30 For 15% margin:

S −30

S = 0.15, S = 0.8530 ≈ $35.29.

37 a P = 78 - 0.002Q Explanation: At P = $45, Q = 22,000 Slope = 30006 = 0.002 Equation: 45 = a − 0.002 × 22, 000, a = 78 Thus, P = 78 − 0.002Q.