Question 1

The revenue curve shows the relationship between the sales price and quantity sold.

Accepted Answer

A) True 
 B)False

Question 2

The curve that shows the relationship between the total sales revenue and quantity sold is called the:

Accepted Answer

A) marginal revenue curve. 
B) average cost curve. 
C) profit curve. 
D) demand curve. 
E) revenue curvE. 
A) marginal revenue curve. 
B) average cost curve. 
C) profit curve. 
D) demand curve. 
E) revenue curvE.

Question 3

Voltage Electrical,which installs sophisticated electronic-control systems in new homes,prices jobs by using the time-and-materials method.The following data apply to a job for LMB Builders:
Labor hours: 180
Materials cost: $48,000
The following predictions,based on 30,000 direct labor hours,pertain to the company's operations for the year:

Accepted Answer

@#IMG-DLM& 
Voltage Electrical adds a markup of $1

Question 4

Consider the following statements regarding the economic pricing model:
I.The economic model is limited in use because a firm's demand curve is difficult to determine.
II.The marginal revenue and marginal cost model is valid for all forms of market organization (perfect competition,oligopoly,and so forth).
III.Cost accounting systems are not designed to measure the marginal changes in cost incurred as production and sales increase.
Which of the above statements is (are)true?

Accepted Answer

A) I only. 
B) III only. 
C) I and III. 
D) II and III. 
E) I,II,and III. 
A) I only. 
B) III only. 
C) I and III. 
D) II and III. 
E) I,II,and III.

Question 5

Quantum Enterprises currently sells a piece of luggage for $200.An aggressive competitor has announced plans for a similar product that will be sold for $170.Quantum's marketing department believes that if the price is dropped to meet competition,unit sales will increase by 10%.The current cost to manufacture and distribute the luggage is $130,and Quantum has a profit goal of 30% of sales.If Quantum meets competitive selling prices,what must happen to the company's manufacturing and distribution cost?

Accepted Answer

A) Nothing,because the costs are within defined ranges and can actually increase by $10. 
B) Nothing,because the costs are within defined ranges and can actually increase by $23. 
C) Costs must decrease by $11. 
D) Costs must decrease by $39. 
E) None of thesE. 
A) Nothing,because the costs are within defined ranges and can actually increase by $10. 
B) Nothing,because the costs are within defined ranges and can actually increase by $23. 
C) Costs must decrease by $11. 
D) Costs must decrease by $39. 
E) None of thesE.

Question 6

If a particular job takes 20 hours of labor and $800 of materials,the price charged for the job is:

Accepted Answer

A) $1,380. 
B) $1,444. 
C) $1,530. 
D) $1,594. 
E) some other amount. 
A) $1,380. 
B) $1,444. 
C) $1,530. 
D) $1,594. 
E) some other amount.

Question 7

If a company has excess capacity,which of the following is a sensible bidding strategy?

Accepted Answer

A) Set a price to cover all costs. 
B) Base the bid on the incremental costs incurred because the job will contribute toward the company's profit. 
C) Base the bid solely on direct labor hours. 
D) Downplay the potential impact of competitors. 
E) Allocate common fixed costs to individual jobs before preparing the bid. 
A) Set a price to cover all costs. 
B) Base the bid on the incremental costs incurred because the job will contribute toward the company's profit. 
C) Base the bid solely on direct labor hours. 
D) Downplay the potential impact of competitors. 
E) Allocate common fixed costs to individual jobs before preparing the bid.

Question 8

Patterson and Clay Companies both use cost-plus pricing formulas and arrived at a selling price of $1,000 for the same product.Patterson uses absorption manufacturing cost as the basis for computing its dollar markup whereas Clay uses total cost.Which of the following choices correctly denotes the company that would have (1)the higher cost basis for deriving its dollar markup and (2)the higher markup percentage?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 9

Penetration pricing is a pricing strategy in which a new product's initial price is set relatively low in order to gain a large market share.

Accepted Answer

A) True 
 B)False

Question 10

Franco Electronics currently sells a camera for $240.An aggressive competitor has announced plans for a similar product that will be sold for $205.Franco's marketing department believes that if the price is dropped to meet competition,unit sales will increase by 10%.The current cost to manufacture and distribute the camera is $175,and Franco has a profit goal of 20% of sales.If Franco meets competitive selling prices,what is the company's target cost?

Accepted Answer

A) $41. 
B) $48. 
C) $164. 
D) $175. 
E) $192. 
A) $41. 
B) $48. 
C) $164. 
D) $175. 
E) $192.

Question 11

Which of the following choices correctly denotes factors that can influence a company's pricing practices for goods and services?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 12

The following costs relate to Southside Company: Variable manufacturing cost,$30;variable selling and administrative cost,$8;applied fixed manufacturing overhead,$15;and allocated fixed selling and administrative cost,$4.If Southside uses absorption manufacturing-cost pricing formulas,the company's markup percentage would be computed on the basis of:

Accepted Answer

A) $30. 
B) $38. 
C) $45. 
D) $57. 
E) some other amount. 
A) $30. 
B) $38. 
C) $45. 
D) $57. 
E) some other amount.

Question 13

The time charge per hour is:

Accepted Answer

A) $19.50. 
B) $27.00. 
C) $29.00. 
D) $36.50. 
E) some other amount. 
A) $19.50. 
B) $27.00. 
C) $29.00. 
D) $36.50. 
E) some other amount.

Question 14

The curve that shows the relationship between the sales price and quantity sold is called the:

Accepted Answer

A) marginal revenue curve. 
B) average cost curve. 
C) profit curve. 
D) demand curve. 
E) revenue curvE. 
A) marginal revenue curve. 
B) average cost curve. 
C) profit curve. 
D) demand curve. 
E) revenue curvE.

Question 15

Which of the following cost-reduction and process-improvement techniques is often used in conjunction with target costing?

Accepted Answer

A) Linear programming. 
B) Deterministic simulations. 
C) Cost allocation. 
D) Budgetary padding. 
E) Value engineering. 
A) Linear programming. 
B) Deterministic simulations. 
C) Cost allocation. 
D) Budgetary padding. 
E) Value engineering.

Question 16

Montana uses a 140% markup on total cost and recently computed a selling price of $1,560 for a particular product.On the basis of this information,the product's total cost is:

Accepted Answer

A) $650.00. 
B) $910.00. 
C) $1,114.29. 
D) $2,184.00. 
E) some other amount. 
A) $650.00. 
B) $910.00. 
C) $1,114.29. 
D) $2,184.00. 
E) some other amount.

Question 17

If a firm has no excess capacity,which of the following is a sensible bidding strategy?

Accepted Answer

A) Set a price to cover all costs. 
B) Base the bid on the incremental costs incurred because the job will contribute toward the company's profit. 
C) Base the bid solely on direct labor hours. 
D) Downplay the potential impact of competitors. 
E) Try to minimize the company's tax liability. 
A) Set a price to cover all costs. 
B) Base the bid on the incremental costs incurred because the job will contribute toward the company's profit. 
C) Base the bid solely on direct labor hours. 
D) Downplay the potential impact of competitors. 
E) Try to minimize the company's tax liability.

Question 18

Belcher Company,which desires to enter the market with a new product,will perform the following tasks:
1-Design and engineer the product.
2-Determine the product's cost.
3-Determine the desired profit margin.
4-Determine the suggested selling price.
If Belcher uses target costing,which task would the company perform first?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
E) None of thesE. 
A) 1. 
B) 2. 
C) 3. 
D) 4. 
E) None of thesE.

Question 19

Madison produces bicycles in a highly competitive market.During the past year,the company has added a 30% markup on the $250 manufacturing cost for one of its most popular models.A new competitor manufactures a similar model,has established a $300 selling price,and is seriously eroding Madison's market share.Management now desires to use a target-costing approach to remain competitive and is willing to accept a 20% return on sales.If target costing is used,which of the following choices correctly denotes (1)the price that Madison will charge and (2)company's target cost?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 20

With the time and material pricing method,the hourly time charge is typically set equal to:

Accepted Answer

A) the hourly labor cost. 
B) the hourly labor cost + annual overhead. 
C) the hourly labor cost + an hourly overhead charge + an hourly charge to cover the profit margin. 
D) annual overhead + an hourly charge to cover the profit margin. 
E) the hourly labor cost + an hourly charge to cover the profit margin. 
A) the hourly labor cost. 
B) the hourly labor cost + annual overhead. 
C) the hourly labor cost + an hourly overhead charge + an hourly charge to cover the profit margin. 
D) annual overhead + an hourly charge to cover the profit margin. 
E) the hourly labor cost + an hourly charge to cover the profit margin.

The revenue curve shows the relationship between the sales price and quantity sold.

The curve that shows the relationship between the total sales revenue and quantity sold is called the:

If a particular job takes 20 hours of labor and $800 of materials,the price charged for the job is:

If a company has excess capacity,which of the following is a sensible bidding strategy?

Penetration pricing is a pricing strategy in which a new product's initial price is set relatively low in order to gain a large market share.

Which of the following choices correctly denotes factors that can influence a company's pricing practices for goods and services?

The time charge per hour is:

The curve that shows the relationship between the sales price and quantity sold is called the:

Which of the following cost-reduction and process-improvement techniques is often used in conjunction with target costing?

Montana uses a 140% markup on total cost and recently computed a selling price of $1,560 for a particular product.On the basis of this information,the product's total cost is:

If a firm has no excess capacity,which of the following is a sensible bidding strategy?

With the time and material pricing method,the hourly time charge is typically set equal to:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 15: Target Costing and Cost Analysis for Pricing Decisions

The revenue curve shows the relationship between the sales price and quantity sold.

The curve that shows the relationship between the total sales revenue and quantity sold is called the:

If a particular job takes 20 hours of labor and $800 of materials,the price charged for the job is:

If a company has excess capacity,which of the following is a sensible bidding strategy?

Penetration pricing is a pricing strategy in which a new product's initial price is set relatively low in order to gain a large market share.

Which of the following choices correctly denotes factors that can influence a company's pricing practices for goods and services?

The time charge per hour is:

The curve that shows the relationship between the sales price and quantity sold is called the:

Which of the following cost-reduction and process-improvement techniques is often used in conjunction with target costing?

Montana uses a 140% markup on total cost and recently computed a selling price of $1,560 for a particular product.On the basis of this information,the product's total cost is:

If a firm has no excess capacity,which of the following is a sensible bidding strategy?

With the time and material pricing method,the hourly time charge is typically set equal to:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters