Question 1

If Johnson determines price using a 40% markup of full manufacturing cost, the price is:

Accepted Answer

A) $262.50 
B) $306.00 
C) $375.00 
D) $364.29 
E) $330.00 
A) $262.50 
B) $306.00 
C) $375.00 
D) $364.29 
E) $330.00

Question 2

The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:

Accepted Answer

A) A more responsive and flexible manufacturing environment. 
B) Better customer relationships. 
C) Quicker data accessibility. 
D) Faster setup times. 
A) A more responsive and flexible manufacturing environment. 
B) Better customer relationships. 
C) Quicker data accessibility. 
D) Faster setup times.

Question 3

Which is the most profitable product if there is a constraint on labor time, so that total demand for all products cannot be met?

Accepted Answer

A) Product X. 
B) Product Y. 
C) Product Z. 
D) More than one of the products has equal total throughput margin per labor minute. 
E) There isn't enough information to answer the question. 
A) Product X. 
B) Product Y. 
C) Product Z. 
D) More than one of the products has equal total throughput margin per labor minute. 
E) There isn't enough information to answer the question.

Question 4

____________________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product's desired functionality:

Accepted Answer

A) Consumer analysis. 
B) Sales force analysis. 
C) Design analysis. 
D) R&D analysis. 
E) Market place analysis. 
A) Consumer analysis. 
B) Sales force analysis. 
C) Design analysis. 
D) R&D analysis. 
E) Market place analysis.

Question 5

What price will the company charge if the firm uses cost-plus pricing based on variable manufacturing cost and a markup percentage of 200%?

Accepted Answer

A) $810. 
B) $450. 
C) $540. 
D) $675. 
E) Some other amount. 
A) $810. 
B) $450. 
C) $540. 
D) $675. 
E) Some other amount.

Question 6

Irrespective of the competitor's price, what is EEC's required selling price if the target profit is 25% of sales and current costs cannot be reduced?

Accepted Answer

A) $280.00. 
B) $292.50. 
C) $299.00. 
D) $308.50. 
A) $280.00. 
B) $292.50. 
C) $299.00. 
D) $308.50.

Question 7

What cost management technique does this case illustrate?

Accepted Answer

A) Target costing. 
B) Theory of constraints. 
C) Life-cycle costing. 
D) ABC analysis. 
A) Target costing. 
B) Theory of constraints. 
C) Life-cycle costing. 
D) ABC analysis.

Question 8

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising:

Accepted Answer

A) Target costing. 
B) Life cycle costing. 
C) Variable costing. 
D) Absorption costing. 
E) Competitive costing. 
A) Target costing. 
B) Life cycle costing. 
C) Variable costing. 
D) Absorption costing. 
E) Competitive costing.

Question 9

AirTravel Inc. manufactures a wide variety of parts for commercial aircraft, including airplane engines. The component is purchased by OEM (original equipment manufacturers) such as Boeing, for use in the larger and more powerful outboards. The units sell for $10,000, and sales volume averages 2,000 units per year. Recently, AirTravel's major competitor lowered the price of the equivalent part to $9,500. The market was very competitive, and AirTravel realized it had to meet the new price or lose significant market share. The controller assembled the following data for the most recent year:   Required:
Calculate the target cost for maintaining current market share and profitability.

Accepted Answer

Answer may vary
Feedback: The

Question 10

If Johnson determines price using a desired return on life cycle costs of 30%, the price is:

Accepted Answer

A) $262.50 
B) $306.00 
C) $375.00 
D) $364.29 
E) $330.00 
A) $262.50 
B) $306.00 
C) $375.00 
D) $364.29 
E) $330.00

Question 11

What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 150%?

Accepted Answer

A) $405.00. 
B) $540.00. 
C) $675. 
D) $900.00. 
E) Some other amount. 
A) $405.00. 
B) $540.00. 
C) $675. 
D) $900.00. 
E) Some other amount.

Question 12

Which of the following are computer-based databases that include comprehensive information about the firm's cost drivers?

Accepted Answer

A) Cost tables. 
B) Cost databases. 
C) Cost driver tables. 
D) Excel tables. 
A) Cost tables. 
B) Cost databases. 
C) Cost driver tables. 
D) Excel tables.

Question 13

Profit before taxes for the Askin product, per life-cycle income statements, is:

Accepted Answer

A) $175,000. 
B) $425,000. 
C) $522,500. 
D) $207,500. 
E) $332,500. 
A) $175,000. 
B) $425,000. 
C) $522,500. 
D) $207,500. 
E) $332,500.

Question 14

Precision Instruments, Inc. is a national firm manufacturing a full line of surgical tools for veterinarians. Recent technological developments have produced a significantly higher grade of steel to make surgical instruments and tools. All of Precision's specialized equipment is designed and calibrated to produce surgical tools using current surgical steel stock. Precision's management wants to begin using the new grade of surgical steel, but recognizes the need to redesign and calibrate existing production equipment and/or purchase newly designed production equipment. Redesign of existing equipment can be done in-house, but requires components from the Swedish manufacturer of the equipment. New equipment will also come from Sweden, but its cost is almost double that paid seven years ago for the existing equipment.
Required:
Identify the constraints Precision will face as it chooses to upgrade existing equipment or purchase new equipment. There is considerable market pressure to shift to use of the new steel stock for production of surgical tools.

Accepted Answer

Answer may vary
Feedback: If Precision c

If Johnson determines price using a 40% markup of full manufacturing cost, the price is:

The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:

Which is the most profitable product if there is a constraint on labor time, so that total demand for all products cannot be met?

____________________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product's desired functionality:

What price will the company charge if the firm uses cost-plus pricing based on variable manufacturing cost and a markup percentage of 200%?

Irrespective of the competitor's price, what is EEC's required selling price if the target profit is 25% of sales and current costs cannot be reduced?

What cost management technique does this case illustrate?

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising:

If Johnson determines price using a desired return on life cycle costs of 30%, the price is:

What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 150%?

Which of the following are computer-based databases that include comprehensive information about the firm's cost drivers?

Profit before taxes for the Askin product, per life-cycle income statements, is:

Cost Management and Strategy

Implementing Strategy: the Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 13: Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

If Johnson determines price using a 40% markup of full manufacturing cost, the price is:

The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:

Which is the most profitable product if there is a constraint on labor time, so that total demand for all products cannot be met?

____________________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product's desired functionality:

What price will the company charge if the firm uses cost-plus pricing based on variable manufacturing cost and a markup percentage of 200%?

Irrespective of the competitor's price, what is EEC's required selling price if the target profit is 25% of sales and current costs cannot be reduced?

What cost management technique does this case illustrate?

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising:

If Johnson determines price using a desired return on life cycle costs of 30%, the price is:

What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 150%?

Which of the following are computer-based databases that include comprehensive information about the firm's cost drivers?

Profit before taxes for the Askin product, per life-cycle income statements, is:

Cost Management and Strategy

Implementing Strategy: the Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters