Question 1

How is an expected selling price determined in a cost-plus pricing approach?

Accepted Answer

First, the business must determine the t

Question 2

In a target costing pricing approach, the desired profit per unit is

Accepted Answer

A)  added to the total cost per unit. 
B)  added to the variable cost per unit. 
C)  deducted from the market selling price per unit. 
D)  deducted from the total cost per unit. 
A)  added to the total cost per unit. 
B)  added to the variable cost per unit. 
C)  deducted from the market selling price per unit. 
D)  deducted from the total cost per unit.

Question 3

If a company that has opted to use target costing for target pricing computes a unit production cost that exceeds the target unit cost, then the company should

Accepted Answer

A)  not manufacture and sell the product. 
B)  use lower quality materials which cost less to make the product. 
C)  perform cost analysis and value engineering to achieve a target unit cost. 
D)  increase the unit selling price so that the unit target cost will increase. 
A)  not manufacture and sell the product. 
B)  use lower quality materials which cost less to make the product. 
C)  perform cost analysis and value engineering to achieve a target unit cost. 
D)  increase the unit selling price so that the unit target cost will increase.

Question 4

You are presented with the following three scenarios for Yeng Company:   With regards to Yeng's price, cost, and product, what can be concluded from Scenario #1?

Accepted Answer

A)  Yeng Company has incurred a loss because it is not charging a high enough price to cover the costs incurred. 
B)  Yeng Company has incurred a loss because its sales in units are lower and cannot cover its costs incurred. 
C)  Yeng Company could make a profit if it produces and sells three more products. 
D)  Yeng Company can raise its price to become profitable without having to worry about other competitors with lower selling prices driving it out of the market. 
A)  Yeng Company has incurred a loss because it is not charging a high enough price to cover the costs incurred. 
B)  Yeng Company has incurred a loss because its sales in units are lower and cannot cover its costs incurred. 
C)  Yeng Company could make a profit if it produces and sells three more products. 
D)  Yeng Company can raise its price to become profitable without having to worry about other competitors with lower selling prices driving it out of the market.

Question 5

If the existing unit cost is above a target cost per unit, then

Accepted Answer

A)  the unit selling price is adjusted upward to cover the unit cost. 
B)  cost analysis is performed to identify which components of the product/service can be targeted for cost reduction. 
C)  the company should not manufacture and sell this particular product/service. 
D)  the company should recompute the cost per unit only using the variable unit costs. 
A)  the unit selling price is adjusted upward to cover the unit cost. 
B)  cost analysis is performed to identify which components of the product/service can be targeted for cost reduction. 
C)  the company should not manufacture and sell this particular product/service. 
D)  the company should recompute the cost per unit only using the variable unit costs.

Question 6

Which of the following statements is true regarding price discrimination?

Accepted Answer

A)  Differential pricing due to race, religion, disability, or gender is legal. 
B)  Price discrimination that causes a competitive injury to another company is not illegal. 
C)  Price discrimination segments the market based on customers' willingness to pay. 
D)  A company will most likely decrease its profits by having different prices. 
A)  Differential pricing due to race, religion, disability, or gender is legal. 
B)  Price discrimination that causes a competitive injury to another company is not illegal. 
C)  Price discrimination segments the market based on customers' willingness to pay. 
D)  A company will most likely decrease its profits by having different prices.

Question 7

Match the term with the appropriate definition.
-Competitive markets

Accepted Answer

A)  comprised of many buyers and sellers and undifferentiated products 
B)  have the power to influence the market price and enjoy pricing power 
C)  intersection of units supplied and units demanded which shows the corresponding price 
D)  accept the prevailing market price and sell each unit at that given market price 
A)  comprised of many buyers and sellers and undifferentiated products 
B)  have the power to influence the market price and enjoy pricing power 
C)  intersection of units supplied and units demanded which shows the corresponding price 
D)  accept the prevailing market price and sell each unit at that given market price

Question 8

The first step in the target costing for target pricing approach is

Accepted Answer

A)  calculating a target cost per unit. 
B)  using the prevailing market price per unit as a price ceiling. 
C)  computing the budgeted profit per unit. 
D)  determining the total cost per unit. 
A)  calculating a target cost per unit. 
B)  using the prevailing market price per unit as a price ceiling. 
C)  computing the budgeted profit per unit. 
D)  determining the total cost per unit.

Question 9

Khan Manufacturing Company has the following unit manufacturing cost for products currently sold to outside customers:   A special order for 3,000 units has been received from a foreign company. The unit price requested is $65. The normal unit price is $90. If the order is accepted, unit variable costs will increase by $2 for additional shipping costs. The company currently has excess operating capacity. If the order is accepted, what will the differential operating income or loss be?

Accepted Answer

Differenti

Question 10

In highly competitive markets, players are

Accepted Answer

A)  price takers. 
B)  price makers. 
C)  price negotiators. 
D)  price leaders. 
A)  price takers. 
B)  price makers. 
C)  price negotiators. 
D)  price leaders.

Question 11

How is a special-order price determined for a product or service?

Accepted Answer

A special-order price is determined in t

Question 12

Winters Company is considering accepting a special order. Based on 10,000 units, the following costs are incurred by Winters: direct materials of $5, direct labor of $10, variable overhead of $8, and fixed overhead of $6. The wholesaler requesting the special order wants to only pay $25 for 2,000 units when the normal retail unit selling price is $50. If Winters accepts the special order, assuming it has sufficient capacity to fill the order, what amount of differential operating income (loss) would it recognize?

Accepted Answer

A)  ($6,000) 
B)  $4,000 
C)  $20,000 
D)  $24,000 
A)  ($6,000) 
B)  $4,000 
C)  $20,000 
D)  $24,000

Question 13

Quigley, Inc. is introducing a new product. Since the market for this product is very competitive, the company plans to use a target cost approach. Projected sales revenue is $950,000 ($95 per unit) and target costs are $700,000.
a. What is the desired profit per unit?
b. What is the target cost for the product?

Accepted Answer

a. $25 per unit; Desired profit per unit

Question 14

Target costing is used for products and services sold

Accepted Answer

A)  in competitive markets. 
B)  that are unique, with distinguishing characteristics. 
C)  where customers lack good information on the market. 
D)  where specific firms can influence prices. 
A)  in competitive markets. 
B)  that are unique, with distinguishing characteristics. 
C)  where customers lack good information on the market. 
D)  where specific firms can influence prices.

Question 15

If a company sets its product or service price too high, it might cause

Accepted Answer

A)  the demand to increase for the product. 
B)  customers to not purchase the product. 
C)  supply of the product or service to decline. 
D)  the market share of a competitor to decrease. 
A)  the demand to increase for the product. 
B)  customers to not purchase the product. 
C)  supply of the product or service to decline. 
D)  the market share of a competitor to decrease.

Question 16

MEX Company manufactures a product with a cost of $52 per unit ($30 variable and $22 fixed). This product normally sells to customers for $60 per unit. Ixtapa Industries, a foreign company, offers to purchase 5,000 units at $42 each. MEX Company would incur $4 of special packaging and shipping costs if the order is accepted. MEX Company has sufficient unused capacity to produce the 5,000 special-order units. If the special order is accepted, what will the effect be on MEX Company's income?

Accepted Answer

The answer of MEX Company manufactures a product with a...

Question 17

Kringle Company produces holiday ornaments that it sells to its regular customers for $12 per unit. The cost to produce each unit is $9, of which $6 is variable per unit and $3 is fixed per unit. A local charity has asked Kringle Company to produce 1,000 ornaments for its annual charity fund raising event as a gift for each donation. The charity is asking for a special pricing offer at $8 per unit instead of the normal $12 per unit. The ornaments will not require any customization, and Kringle Company currently has sufficient excess operating capacity to manufacture the 1,000 special order ornaments. Should Kringle Company accept the special-order proposal from the local charity. (Show all computations to support your decision.)

Accepted Answer

Kringle Company should accept

Question 18

What four factors must management consider when making pricing decisions? Briefly discuss each factor.

Accepted Answer

a. Context - are you a price taker in a

How is an expected selling price determined in a cost-plus pricing approach?

In a target costing pricing approach, the desired profit per unit is

If a company that has opted to use target costing for target pricing computes a unit production cost that exceeds the target unit cost, then the company should

You are presented with the following three scenarios for Yeng Company: With regards to Yeng's price, cost, and product, what can be concluded from Scenario #1?

If the existing unit cost is above a target cost per unit, then

Which of the following statements is true regarding price discrimination?

Match the term with the appropriate definition. -Competitive markets

The first step in the target costing for target pricing approach is

In highly competitive markets, players are

How is a special-order price determined for a product or service?

Target costing is used for products and services sold

If a company sets its product or service price too high, it might cause

What four factors must management consider when making pricing decisions? Briefly discuss each factor.

Cost Accounting Has Purpose

Refresher on Cost Terms Road Map

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Cost Accounting Has Purpose

Mastering the Master Budget

Capital Budgeting Choices and Decisions

Job Costing

Activity- Based Costing

Variance Analysis and Standard Costing

Process Costing

Absorption Versus Variable Costing

Data Analytics

Support Department Costing

Joint Costs and Decision-Making

Management Control Systems and Transfer Pricing

Business Strategy, Performance Measurement, and the Balanced Scorecard

Filters

Exam 16: The Art and Science of Pricing to Optimize Revenue

How is an expected selling price determined in a cost-plus pricing approach?

In a target costing pricing approach, the desired profit per unit is

If a company that has opted to use target costing for target pricing computes a unit production cost that exceeds the target unit cost, then the company should

You are presented with the following three scenarios for Yeng Company: With regards to Yeng's price, cost, and product, what can be concluded from Scenario #1?

If the existing unit cost is above a target cost per unit, then

Which of the following statements is true regarding price discrimination?

Match the term with the appropriate definition. -Competitive markets

The first step in the target costing for target pricing approach is

In highly competitive markets, players are

How is a special-order price determined for a product or service?

Target costing is used for products and services sold

If a company sets its product or service price too high, it might cause

What four factors must management consider when making pricing decisions? Briefly discuss each factor.

Cost Accounting Has Purpose

Refresher on Cost Terms Road Map

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Cost Accounting Has Purpose

Mastering the Master Budget

Capital Budgeting Choices and Decisions

Job Costing

Activity- Based Costing

Variance Analysis and Standard Costing

Process Costing

Absorption Versus Variable Costing

Data Analytics

Support Department Costing

Joint Costs and Decision-Making

Management Control Systems and Transfer Pricing

Business Strategy, Performance Measurement, and the Balanced Scorecard

Filters