Question 1

When using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup?

Accepted Answer

A) total selling and administrative expenses plus desired profit 
B) total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit 
C) total costs plus desired profit 
D) desired profit 
A) total selling and administrative expenses plus desired profit 
B) total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit 
C) total costs plus desired profit 
D) desired profit

Question 2

The dollar amount of desired profit from the production and sale of the company's product is

Accepted Answer

A) $89,600 
B) $39,200 
C) $70,000 
D) $84,000 
A) $89,600 
B) $39,200 
C) $70,000 
D) $84,000

Question 3

Sparrow Co.is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $8.00 a unit.The unit cost for Sparrow Co.to make the part is $9.00, which includes $0.60 of fixed costs.If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?

Accepted Answer

A) $12,000 cost decrease 
B) $4,000 cost increase 
C) $20,000 cost decrease 
D) $1,600 cost increase 
A) $12,000 cost decrease 
B) $4,000 cost increase 
C) $20,000 cost decrease 
D) $1,600 cost increase

Question 4

The markup percentage for the sale of the company's product is

Accepted Answer

A) 14% 
B) 5.6% 
C) 45.71% 
D) 11.2% 
A) 14% 
B) 5.6% 
C) 45.71% 
D) 11.2%

Question 5

Piper Corp.is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit.The unit cost for the business to make the part is $36, including fixed costs, and $26, not including fixed costs.If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?

Accepted Answer

A) $30,000 cost decrease 
B) $180,000 cost increase 
C) $30,000 cost increase 
D) $180,000 cost decrease 
A) $30,000 cost decrease 
B) $180,000 cost increase 
C) $30,000 cost increase 
D) $180,000 cost decrease

Question 6

Determine the markup percentage on variable cost.

Accepted Answer

A) 100% 
B) 110% 
C) 80% 
D) 46.5% 
A) 100% 
B) 110% 
C) 80% 
D) 46.5%

Question 7

The variable cost per unit for the production and sale of the company's product is

Accepted Answer

A) $14.00 
B) $12.60 
C) $9.80 
D) $11.20 
A) $14.00 
B) $12.60 
C) $9.80 
D) $11.20

Question 8

What is the target cost of the company's product?

Accepted Answer

A) $44 
B) $42 
C) $43 
D) $40 
A) $44 
B) $42 
C) $43 
D) $40

Question 9

Which of the following reasons would cause a company to reject an offer to accept business at a special price?

Accepted Answer

A) The additional sale will not conflict with regular sales. 
B) The additional sales will increase differential income. 
C) The additional sales will not increase fixed expenses. 
D) The additional sales will increase fixed expenses. 
A) The additional sale will not conflict with regular sales. 
B) The additional sales will increase differential income. 
C) The additional sales will not increase fixed expenses. 
D) The additional sales will increase fixed expenses.

Question 10

Make-or-buy decisions should be made only with related parties.

Accepted Answer

A) True 
 B)False

Question 11

What pricing concept considers the price that other providers charge for the same product?

Accepted Answer

A) demand-based concept 
B) total cost concept 
C) cost-plus concept 
D) competition-based concept 
A) demand-based concept 
B) total cost concept 
C) cost-plus concept 
D) competition-based concept

Question 12

Finch, Inc.has bought a new server and must decide what to do with the old one.The cost of the old server was originally $60,000 and has been depreciated $45,000.The company has received two offers.One offer was made to purchase the equipment outright for $18,500 less a 5% sales commission.The other offer was to lease the equipment for $7,000 for the next five years but the company will be required to provide maintenance and insurance totaling $3,000 per year.What offer should Finch, Inc.accept?

Accepted Answer

The answer of Finch, Inc.has bought a new server and...

Question 13

Yasmin Co.can further process Product B to produce Product C.Product B is currently selling for $30 per pound and costs $28 per pound to produce.Product C would sell for $55 per pound and would require an additional cost of $31 per pound to produce.What is the differential cost of producing Product C?

Accepted Answer

A) $30 per pound 
B) $31 per pound 
C) $28 per pound 
D) $55 per pound 
A) $30 per pound 
B) $31 per pound 
C) $28 per pound 
D) $55 per pound

Question 14

Differential revenue is the amount of income that would result from the best available alternative proposed use of cash.

Accepted Answer

A) True 
 B)False

Question 15

Under the variable cost concept, only variable costs are included in the cost amount per unit to which the markup is added.

Accepted Answer

A) True 
 B)False

Question 16

When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.

Accepted Answer

A) True 
 B)False

Question 17

The costs of initially producing an intermediate product should be considered in deciding whether to further process a product, even though the costs will not change, regardless of the decision.

Accepted Answer

A) True 
 B)False

Question 18

Match each of the definitions that follow with the term a-e it defines.
-Not relevant to future decisions

Accepted Answer

A) Opportunity cost 
B) Sunk cost 
C) Theory of constraints 
D) Differential analysis 
E) Product cost distortion 
A) Opportunity cost 
B) Sunk cost 
C) Theory of constraints 
D) Differential analysis 
E) Product cost distortion

Question 19

The lowest contribution margin per scarce resource is the most profitable.

Accepted Answer

A) True 
 B)False

Question 20

The amount of income that would result from an alternative use of cash is called opportunity cost.

Accepted Answer

A) True 
 B)False

When using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup?

The dollar amount of desired profit from the production and sale of the company's product is

The markup percentage for the sale of the company's product is

Determine the markup percentage on variable cost.

The variable cost per unit for the production and sale of the company's product is

What is the target cost of the company's product?

Which of the following reasons would cause a company to reject an offer to accept business at a special price?

Make-or-buy decisions should be made only with related parties.

What pricing concept considers the price that other providers charge for the same product?

Differential revenue is the amount of income that would result from the best available alternative proposed use of cash.

Under the variable cost concept, only variable costs are included in the cost amount per unit to which the markup is added.

When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.

The costs of initially producing an intermediate product should be considered in deciding whether to further process a product, even though the costs will not change, regardless of the decision.

Match each of the definitions that follow with the term a-e it defines. -Not relevant to future decisions

The lowest contribution margin per scarce resource is the most profitable.

The amount of income that would result from an alternative use of cash is called opportunity cost.

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 9: Differential Analysis, Product Pricing, and Activity-Based Costing

When using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup?

The dollar amount of desired profit from the production and sale of the company's product is

The markup percentage for the sale of the company's product is

Determine the markup percentage on variable cost.

The variable cost per unit for the production and sale of the company's product is

What is the target cost of the company's product?

Which of the following reasons would cause a company to reject an offer to accept business at a special price?

Make-or-buy decisions should be made only with related parties.

What pricing concept considers the price that other providers charge for the same product?

Differential revenue is the amount of income that would result from the best available alternative proposed use of cash.

Under the variable cost concept, only variable costs are included in the cost amount per unit to which the markup is added.

When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.

The costs of initially producing an intermediate product should be considered in deciding whether to further process a product, even though the costs will not change, regardless of the decision.

Match each of the definitions that follow with the term a-e it defines. -Not relevant to future decisions

The lowest contribution margin per scarce resource is the most profitable.

The amount of income that would result from an alternative use of cash is called opportunity cost.

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters