Question 1

In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

Accepted Answer

A) fixed cost per unit. 
B) total cost per unit. 
C) total manufacturing cost per unit. 
D) variable cost per unit. 
A) fixed cost per unit. 
B) total cost per unit. 
C) total manufacturing cost per unit. 
D) variable cost per unit.

Question 2

Assume the Thread Division has excess capacity.The Garment Division wants the Thread Division to furnish them additional spools of thread that could be made using the excess capacity.In a negotiated transfer price, the Thread Division should accept as a minimum any transfer price that exceeds the

Accepted Answer

A) total cost of producing spools for outside sales. 
B) variable costs of producing the additional spools for the Garment Division. 
C) contribution margin and outside spool sales. 
D) foregone contribution margin on outside spool sales. 
A) total cost of producing spools for outside sales. 
B) variable costs of producing the additional spools for the Garment Division. 
C) contribution margin and outside spool sales. 
D) foregone contribution margin on outside spool sales.

Question 3

Lonely Guy Repair Service recently performed repair services for a customer that totaled $400.Somehow the bill was lost and the company accountant was trying to recreate the bill from memory.This is what was remembered: $$\begin{array} { l l } 
\text { Total bill } & \$ 600 \
\text { Labor profit margin } & \$ 10 \
\text { Materials profit margin } & 20 \% \
\text { Total labor charges } & \$ 390 \
\text { Cost of materials used } & \$ 120 \
\text { Total hourly cost } & \$ 22.50
\end{array}$$ 
-What was the material loading charge?

Accepted Answer

A) 37.5% 
B) 43.8% 
C) 61.3% 
D) 75% 
A) 37.5% 
B) 43.8% 
C) 61.3% 
D) 75%

Question 4

The Can Division of Fruit Products Inc.manufactures and sells tin cans externally for $0.60 per can.Its unit variable costs and unit fixed costs are $0.24 and $0.08, respectively.The Packaging Division wants to purchase 50,000 cans at $0.32 a can.Selling internally will save $0.02 a can.
-Assuming the Can Division has sufficient capacity, what is the minimum transfer price it should accept?

Accepted Answer

A) $0.24 
B) $0.32 
C) $0.22 
D) $0.30 
A) $0.24 
B) $0.32 
C) $0.22 
D) $0.30

Question 5

The Selling Division's unit sales price is $25 and its unit variable cost is $15.Its capacity is 10,000 units.Fixed costs per unit are $6.Current outside sales are 8,000 units.
-What is the Selling Division's opportunity cost per unit from selling 3,000 units to the Purchasing Division?

Accepted Answer

A) $10 
B) $25 
C) $4 
D) $0 
A) $10 
B) $25 
C) $4 
D) $0

Question 6

The desired ROI per unit is calculated by

Accepted Answer

A) multiplying the ROI times the investment and dividing by the estimated volume. 
B) multiplying the unit selling price by the ROI. 
C) dividing the total cost by the estimated volume and multiplying by the ROI. 
D) dividing the ROI by the estimated volume and subtracting the result from the unit cost. 
A) multiplying the ROI times the investment and dividing by the estimated volume. 
B) multiplying the unit selling price by the ROI. 
C) dividing the total cost by the estimated volume and multiplying by the ROI. 
D) dividing the ROI by the estimated volume and subtracting the result from the unit cost.

Question 7

In a competitive market, a company is forced to act as a price taker and must emphasize minimizing and controlling costs.

Accepted Answer

A) True 
 B)False

Question 8

The last step in determining the material loading charge percentage is to

Accepted Answer

A) estimate annual costs for purchasing, receiving, and storing materials. 
B) estimate the total cost of parts and materials. 
C) divide material charges by the total estimated costs of parts and materials. 
D) add a desired profit margin on the materials themselves. 
A) estimate annual costs for purchasing, receiving, and storing materials. 
B) estimate the total cost of parts and materials. 
C) divide material charges by the total estimated costs of parts and materials. 
D) add a desired profit margin on the materials themselves.

Question 9

Prices are set by the competitive market when

Accepted Answer

A) the product is specially made for a customer. 
B) there are no other producers capable of manufacturing a similar item. 
C) a company can effectively differentiate its product from others. 
D) a product is not easily distinguished from competing products. 
A) the product is specially made for a customer. 
B) there are no other producers capable of manufacturing a similar item. 
C) a company can effectively differentiate its product from others. 
D) a product is not easily distinguished from competing products.

Question 10

The last step in calculating the hourly rate to be charged in time-and-material pricing is to

Accepted Answer

A) estimate the total labor costs plus fringe benefits. 
B) estimate the total labor hours. 
C) add a profit margin. 
D) add a charge for overhead costs. 
A) estimate the total labor costs plus fringe benefits. 
B) estimate the total labor hours. 
C) add a profit margin. 
D) add a charge for overhead costs.

Question 11

Assuming the selling division has available capacity, a negotiated transfer price should be within the range of

Accepted Answer

A) fixed cost per unit and the external purchase price. 
B) total cost per unit and the external purchase price. 
C) variable cost per unit and the external purchase price. 
D) variable cost per unit and the opportunity cost. 
A) fixed cost per unit and the external purchase price. 
B) total cost per unit and the external purchase price. 
C) variable cost per unit and the external purchase price. 
D) variable cost per unit and the opportunity cost.

Question 12

All of the following are correct statements about the target price except it

Accepted Answer

A) is the price the company believes would place it in the optimal position for its target audience. 
B) is used to determine a product's target cost. 
C) is determined after the company has identified its market and does market research. 
D) is determined after the company sets its desired profit amount. 
A) is the price the company believes would place it in the optimal position for its target audience. 
B) is used to determine a product's target cost. 
C) is determined after the company has identified its market and does market research. 
D) is determined after the company sets its desired profit amount.

Question 13

The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the

Accepted Answer

A) cost-based approach. 
B) market-based approach. 
C) negotiated price approach. 
D) time-and-material pricing approach. 
A) cost-based approach. 
B) market-based approach. 
C) negotiated price approach. 
D) time-and-material pricing approach.

Question 14

In time-and-material pricing, the charge for a particular job is the sum of the labor charge and the

Accepted Answer

A) materials charge. 
B) material loading charge. 
C) materials charge + desired profit. 
D) materials charge + the material loading charge. 
A) materials charge. 
B) material loading charge. 
C) materials charge + desired profit. 
D) materials charge + the material loading charge.

Question 15

Bellingham Suit Co.has received a shipment of suits that cost $200 each.If the company uses cost-plus pricing and applies a markup percentage of 60%, what is the sales price per suit?

Accepted Answer

A) $333 
B) $320 
C) $280 
D) $500 
A) $333 
B) $320 
C) $280 
D) $500

Question 16

The Lumber Division of Paul Bunyon Homes Inc.produces and sells lumber that can be sold to outside customers or within the company to the Construction Division.The following data have been gathered for the coming period: Lumber Division: $\begin{array}{ll}
\text { Capacity } & 200,000 \text { board feet } \
\text { Price per board foot } & \$ 2.50 \
\text { Variable production cost per bd. ft. } & \$ 1.25 \
\text { Variable selling cost per bd. ft. } & \$ 0.50\
\text { Construction Division: }\
\text { Board feet needed } & 60,000\
\text { Outside price paid per bd. } \mathrm{ft} \text {. }&\$2.00
\end{array}$
- If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs. If the Lumber Division has sufficient excess capacity to fulfill the Construction Division's needs, what will be the effect on the company's overall contribution margin?

Accepted Answer

A) Decrease by $30,000 
B) Decrease by $24,000 
C) Increase by $36,000 
D) Increase by $33,500 
A) Decrease by $30,000 
B) Decrease by $24,000 
C) Increase by $36,000 
D) Increase by $33,500

Question 17

In the formula for a minimum transfer price, opportunity cost is the contribution margin of goods sold externally.

Accepted Answer

A) True 
 B)False

Question 18

Larry Cable Inc.plans to introduce a new product and is using the target cost approach.Projected sales revenue is $810,000 ($4.05 per unit) and target costs are $730,000.What is the desired profit per unit?

Accepted Answer

A) $0.40 
B) $2.03 
C) $3.65 
D) None of the above 
A) $0.40 
B) $2.03 
C) $3.65 
D) None of the above

Question 19

Sales volume plays a large role in determining per unit costs in the cost-plus pricing approach.

Accepted Answer

A) True 
 B)False

Question 20

The time component under time-and-material pricing includes a

Accepted Answer

A) loading charge. 
B) charge for receiving, handling, and storing materials. 
C) portion of the materials clerk's wages. 
D) profit margin. 
A) loading charge. 
B) charge for receiving, handling, and storing materials. 
C) portion of the materials clerk's wages. 
D) profit margin.

In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

Assume the Thread Division has excess capacity.The Garment Division wants the Thread Division to furnish them additional spools of thread that could be made using the excess capacity.In a negotiated transfer price, the Thread Division should accept as a minimum any transfer price that exceeds the

The Selling Division's unit sales price is $25 and its unit variable cost is $15.Its capacity is 10,000 units.Fixed costs per unit are $6.Current outside sales are 8,000 units. -What is the Selling Division's opportunity cost per unit from selling 3,000 units to the Purchasing Division?

The desired ROI per unit is calculated by

In a competitive market, a company is forced to act as a price taker and must emphasize minimizing and controlling costs.

The last step in determining the material loading charge percentage is to

Prices are set by the competitive market when

The last step in calculating the hourly rate to be charged in time-and-material pricing is to

Assuming the selling division has available capacity, a negotiated transfer price should be within the range of

All of the following are correct statements about the target price except it

The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the

In time-and-material pricing, the charge for a particular job is the sum of the labor charge and the

Bellingham Suit Co.has received a shipment of suits that cost $200 each.If the company uses cost-plus pricing and applies a markup percentage of 60%, what is the sales price per suit?

In the formula for a minimum transfer price, opportunity cost is the contribution margin of goods sold externally.

Larry Cable Inc.plans to introduce a new product and is using the target cost approach.Projected sales revenue is $810,000 ($4.05 per unit) and target costs are $730,000.What is the desired profit per unit?

Sales volume plays a large role in determining per unit costs in the cost-plus pricing approach.

The time component under time-and-material pricing includes a

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

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Exam 8: Reporting and Analyzing Receivables

In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

Assume the Thread Division has excess capacity.The Garment Division wants the Thread Division to furnish them additional spools of thread that could be made using the excess capacity.In a negotiated transfer price, the Thread Division should accept as a minimum any transfer price that exceeds the

The Selling Division's unit sales price is $25 and its unit variable cost is $15.Its capacity is 10,000 units.Fixed costs per unit are $6.Current outside sales are 8,000 units. -What is the Selling Division's opportunity cost per unit from selling 3,000 units to the Purchasing Division?

The desired ROI per unit is calculated by

In a competitive market, a company is forced to act as a price taker and must emphasize minimizing and controlling costs.

The last step in determining the material loading charge percentage is to

Prices are set by the competitive market when

The last step in calculating the hourly rate to be charged in time-and-material pricing is to

Assuming the selling division has available capacity, a negotiated transfer price should be within the range of

All of the following are correct statements about the target price except it

The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the

In time-and-material pricing, the charge for a particular job is the sum of the labor charge and the

Bellingham Suit Co.has received a shipment of suits that cost $200 each.If the company uses cost-plus pricing and applies a markup percentage of 60%, what is the sales price per suit?

In the formula for a minimum transfer price, opportunity cost is the contribution margin of goods sold externally.

Larry Cable Inc.plans to introduce a new product and is using the target cost approach.Projected sales revenue is $810,000 ($4.05 per unit) and target costs are $730,000.What is the desired profit per unit?

Sales volume plays a large role in determining per unit costs in the cost-plus pricing approach.

The time component under time-and-material pricing includes a

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

Filters