Question 1

Which of the following statements is true of costs and pricing decisions?

Accepted Answer

A)  Companies get profit from selling products only when they are the price makers. 
B)  Companies supply products as long as the price the customer is willing to pay for its products exceeds the price that is charged by the competitor. 
C)  Companies supply products as long as there is a demand for the product in the market regardless of the price at which the products are sold. 
D)  Companies supply products as long as the revenues from selling the additional units exceed the cost of producing them. 
A)  Companies get profit from selling products only when they are the price makers. 
B)  Companies supply products as long as the price the customer is willing to pay for its products exceeds the price that is charged by the competitor. 
C)  Companies supply products as long as there is a demand for the product in the market regardless of the price at which the products are sold. 
D)  Companies supply products as long as the revenues from selling the additional units exceed the cost of producing them.

Question 2

Crimpson Corp.,a California-based company is selling its products for $23.Its average variable costs is $21 and the average selling price of its competitors is $26.This is an example of ________.

Accepted Answer

A)  dumping 
B)  collusive pricing 
C)  predatory pricing 
D)  suicidal pricing 
A)  dumping 
B)  collusive pricing 
C)  predatory pricing 
D)  suicidal pricing

Question 3

Nancy Company has budgeted sales of $300,000 with the following budgeted costs:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 60,000 \
\text { Direct manufacturing labor } & 40,000 \
\text { Factory overhead } & \
\quad \text { Variable } & 30,000 \
\quad \text { Fixed } & 50,000 \
\text { Selling and ad ministrative expenses } & \
\quad \text { Variable } & 20,000 \
\quad \text { Fixed } & 30,000
\end{array}$$ Compute the average markup percentage for setting prices as a percentage of:
a.The full cost of the product
b.The variable cost of the product
c.Variable manufacturing costs
d.Total manufacturing costs

Accepted Answer

a.$60,000 + $40,000 + $30,000 + $50,000

Question 4

Grounded Coffee Products manufactures coffee tables.Grounded Coffee Products has a policy of adding a 20% markup to full costs and currently has excess capacity.The following information pertains to the company's normal operations per month: $\begin{array}{lll}
\text { Output units } & 20,000 \text { tables } \
\text { Machine-hours } & 8,000 \text { hours } \
\text { Direct manufacturing labor-hours } & 10,000 \text { hours } \
\text { Direct materials per unit } & \$ 105 \
\text { Direct manufacturing labor per hour } & \$ 10\\text { Variable manufacturing overhead costs } & \$ 322,500 \
\text { Fixed manufacturing overhead costs } & \$ 1,200,000 \
\text { Product and process design costs } & \$ 1,100,000 \
\text { Marketing and distribution costs } & \$ 1,125,000
\end{array}$ Grounded Coffee Products is approached by an overseas customer to fulfill a one-time-only special order for 1,000 units.All cost relationships remain the same except for a one-time setup charge of $20,000.No additional design,marketing,or distribution costs will be incurred.What is the minimum acceptable bid per unit on this one-time-only special order?

Accepted Answer

A)  $146.125 
B)  $1346.125 
C)  $126.125 
D)  $946.125 
A)  $146.125 
B)  $1346.125 
C)  $126.125 
D)  $946.125

Question 5

Which of the following is explains the cost-plus approach to pricing decisions?

Accepted Answer

A)  arriving at a price for the product based on the competitive pricing prevalent in the market 
B)  arriving at a price based on the perceived value to a customer given the cost of design and added features 
C)  arriving at a price based on the demand and supply trends in the market 
D)  arriving at a price that earns a specific return given the cost of the product 
A)  arriving at a price for the product based on the competitive pricing prevalent in the market 
B)  arriving at a price based on the perceived value to a customer given the cost of design and added features 
C)  arriving at a price based on the demand and supply trends in the market 
D)  arriving at a price that earns a specific return given the cost of the product

Question 6

Managers need to understand customers because ________.

Accepted Answer

A)  they are the key in influencing the board decisions and help in formulating policies with the suppliers 
B)  they guide the managers to formulate pricing policies 
C)  they are more knowledgeable as they easy access to price and other information online 
D)  they influence the costing decisions of the product 
A)  they are the key in influencing the board decisions and help in formulating policies with the suppliers 
B)  they guide the managers to formulate pricing policies 
C)  they are more knowledgeable as they easy access to price and other information online 
D)  they influence the costing decisions of the product

Question 7

Costs can be best managed before ________.

Accepted Answer

A)  they are locked in 
B)  they are incurred 
C)  after they are locked in 
D)  after they are committed to 
A)  they are locked in 
B)  they are incurred 
C)  after they are locked in 
D)  after they are committed to

Question 8

Relevant costs for target pricing are ________.

Accepted Answer

A)  variable manufacturing costs 
B)  variable manufacturing and variable nonmanufacturing costs 
C)  all fixed costs 
D)  all future costs, both variable and fixed 
A)  variable manufacturing costs 
B)  variable manufacturing and variable nonmanufacturing costs 
C)  all fixed costs 
D)  all future costs, both variable and fixed

Question 9

A hotel in Orlando,Florida,experiences peak periods and slower times.How should prices be adjusted during peak periods? During slow times? Why?

Accepted Answer

During peak periods the hotel can justif

Question 10

Price discrimination is the practice of ________.

Accepted Answer

A)  setting different prices for different products 
B)  charging different prices for quantity amounts 
C)  using variable costing for some products and full costing for other products when setting prices 
D)  charging different prices to different customers or clients for the same products or services 
A)  setting different prices for different products 
B)  charging different prices for quantity amounts 
C)  using variable costing for some products and full costing for other products when setting prices 
D)  charging different prices to different customers or clients for the same products or services

Which of the following statements is true of costs and pricing decisions?

Crimpson Corp.,a California-based company is selling its products for $23.Its average variable costs is $21 and the average selling price of its competitors is $26.This is an example of ________.

Which of the following is explains the cost-plus approach to pricing decisions?

Managers need to understand customers because ________.

Costs can be best managed before ________.

Relevant costs for target pricing are ________.

A hotel in Orlando,Florida,experiences peak periods and slower times.How should prices be adjusted during peak periods? During slow times? Why?

Price discrimination is the practice of ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 13: Pricing Decisions and Cost Management

Which of the following statements is true of costs and pricing decisions?

Crimpson Corp.,a California-based company is selling its products for $23.Its average variable costs is $21 and the average selling price of its competitors is $26.This is an example of ________.

Which of the following is explains the cost-plus approach to pricing decisions?

Managers need to understand customers because ________.

Costs can be best managed before ________.

Relevant costs for target pricing are ________.

A hotel in Orlando,Florida,experiences peak periods and slower times.How should prices be adjusted during peak periods? During slow times? Why?

Price discrimination is the practice of ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters