Gonzalez Company has no beginning and ending inventories,and reports the following data about its only product: \[\begin{array} { l l } \text { Direct materials used } & \$ 300,000 \\ \text { Direct labor } & \$ 80,000 \\ \text { Fixed indirect manufacturing } & \$ 100,000 \\ \text { Fixed selling and administrative } & \$ 190,000 \\ \text { Variable indirect manufacturing } & \$ 20,000 \\ \text { Variable selling and administrative } & \$ 90,000 \\ \text { Selling price(per unit) } & \$ 50 \end{array}\] $\begin{array} { l } \text {Units produced and sold }&10,000 \\ \end{array}$ Gonzalez Company uses the absorption approach to prepare the income statement.What is the gross margin?

A) $0 B) $20,000 C) $100,000 D) $120,000 A) $0 B) $20,000 C) $100,000 D) $120,000

Sue Company is considering the production of a new product.Sue Company has the following data available: $\begin{array}{ll} \text { Expected product life } & 4 \text { years } \\ \text { Expected sales (units) over product life } & 2,000 \\ \text { Variable production costs } & \$ 42 \text { per unit } \\ \text { Variable selling costs } & \$ 16 \text { per unit } \\ \text { Annual fixed production costs } & \$ 15,000 \\ \text { Annual fixed selling costs } & \$ 5,000 \\ \text { Research and development costs } & \$ 184,000 \\ \text { Selling price } & \$ 200 \text { per unit } \end{array}$ What is the expected profit or (loss)of the product over the product life cycle?

A) $(40,000) B) $20,000 C) $204,000 D) $880,000 A) $(40,000) B) $20,000 C) $204,000 D) $880,000

Santana Company has no beginning and ending inventories,and reports the following information for its only product: \[\begin{array} { l l } \text { Direct materials used } & \$ 250,000 \\ \text { Direct labor } & \$ 120,000 \\ \text { Fixed indirect manufacturing } & \$ 60,000 \\ \text { Variable indirect manufacturing } & \$ 20,000 \\ \text { Variable selling and administrative } & \$ 50,000 \\ \text { Fixed selling and administrative } & \$ 10,000 \end{array}\] $\begin{array} { l } \text {Units produced and sold }&40,000 \\ \end{array}$ Santana Company uses the absorption approach to prepare the income statement.What is the product cost per unit?

A) $11.00 B) $11.25 C) $12.00 D) $12.75 A) $11.00 B) $11.25 C) $12.00 D) $12.75

Rainbow Company is considering the production of a new product.Rainbow Company has the following data available: $\begin{array}{ll} \text { Expected product life } & 5 \text { years } \\ \text { Expected sales (units) over product life } & 2,000 \\ \text { Variable production costs } & \$ 42 \text { per unit } \\ \text { Variable selling costs } & \$ 16 \text { per unit } \\ \text { Annual fixed production costs } & \$ 15,000 \\ \text { Annual fixed selling costs } & \$ 5,000 \end{array}$ What is the total fixed cost of the product over the product life cycle?

A) $20,000 B) $100,000 C) $116,000 D) $464,000 A) $20,000 B) $100,000 C) $116,000 D) $464,000

Exam 5: Relevant Information for Decision Making With a Focus on Pricing Decisions

For internal decision-making purposes,many companies use the income statement using the approach.For external reporting,most companies use the income statement using the approach.

(Multiple Choice)

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(34)

Question 41

It is misleading to use the absorption costing income statement to predict the effect of changes in sales volume because ________.

(Multiple Choice)

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(42)

Question 42

Gonzalez Company has no beginning and ending inventories,and reports the following data about its only product: Direct materials used \ 300,000 Direct labor \ 80,000 Fixed indirect manufacturing \ 100,000 Fixed selling and administrative \ 190,000 Variable indirect manufacturing \ 20,000 Variable selling and administrative \ 90,000 Selling price(per unit) \ 50 Units produced and sold 10,000 Gonzalez Company uses the absorption approach to prepare the income statement.What is the gross margin?

(Multiple Choice)

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Question 43

In perfect competition,all firms charge the same market price.The only decision for managers is ________.

(Multiple Choice)

4.9/5

(45)

Question 44

Full cost means the total of all variable manufacturing costs and all fixed manufacturing costs.

(True/False)

4.7/5

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Question 45

Market focus group studies and surveys may be used by a firm to determine the price of a product or service.

(True/False)

5.0/5

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Question 46

In imperfect competition,________.

(Multiple Choice)

4.8/5

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Question 47

The absorption approach to the income statement emphasizes the distinction between fixed and variable costs.

(True/False)

4.9/5

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Question 48

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 appliances.There is sufficient capacity available for the special order.What is relevant information for the decision whether to accept or reject the special order?

(Multiple Choice)

4.8/5

(36)

Question 49

With perfect competition,marginal revenue is the additional revenue resulting from the sale of an additional unit.

(True/False)

4.8/5

(36)

Question 50

The absorption costing approach to the income statement is used by companies for external financial reporting.

(True/False)

4.9/5

(44)

Question 51

Sue Company is considering the production of a new product.Sue Company has the following data available: Expected product life 4 years Expected sales (units) over product life 2,000 Variable production costs \ 42 per unit Variable selling costs \ 16 per unit Annual fixed production costs \ 15,000 Annual fixed selling costs \ 5,000 Research and development costs \ 184,000 Selling price \ 200 per unit What is the expected profit or (loss)of the product over the product life cycle?

(Multiple Choice)

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Question 52

Santana Company has no beginning and ending inventories,and reports the following information for its only product: Direct materials used \ 250,000 Direct labor \ 120,000 Fixed indirect manufacturing \ 60,000 Variable indirect manufacturing \ 20,000 Variable selling and administrative \ 50,000 Fixed selling and administrative \ 10,000 Units produced and sold 40,000 Santana Company uses the absorption approach to prepare the income statement.What is the product cost per unit?

(Multiple Choice)

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Question 53

In determining whether to purchase a labor-saving machine,extreme resistance to the machine by employees would be a(n)________.

(Multiple Choice)

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Question 54

The contribution approach to the income statement emphasizes the distinction between ________.

(Multiple Choice)

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Question 55

Discriminatory pricing occurs when a firm sets ________.

(Multiple Choice)

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(40)

Question 56

Rainbow Company is considering the production of a new product.Rainbow Company has the following data available: Expected product life 5 years Expected sales (units) over product life 2,000 Variable production costs \ 42 per unit Variable selling costs \ 16 per unit Annual fixed production costs \ 15,000 Annual fixed selling costs \ 5,000 What is the total fixed cost of the product over the product life cycle?

(Multiple Choice)

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Question 57

Prices based on variable costs represent a contribution approach to pricing.

(True/False)

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Question 58

If the projected cost for a new product to be manufactured exceeds the target cost,what measures can the company undertake to reduce the projected cost?

(Multiple Choice)

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Question 59

A company will bid near the minimum sales price to establish a presence in new markets or with a new customer.

(True/False)

4.8/5

(39)

Question 60

For internal decision-making purposes,many companies use the income statement using the approach.For external reporting,most companies use the income statement using the approach.

It is misleading to use the absorption costing income statement to predict the effect of changes in sales volume because ________.

In perfect competition,all firms charge the same market price.The only decision for managers is ________.

Full cost means the total of all variable manufacturing costs and all fixed manufacturing costs.

Market focus group studies and surveys may be used by a firm to determine the price of a product or service.

In imperfect competition,________.

The absorption approach to the income statement emphasizes the distinction between fixed and variable costs.

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 appliances.There is sufficient capacity available for the special order.What is relevant information for the decision whether to accept or reject the special order?

With perfect competition,marginal revenue is the additional revenue resulting from the sale of an additional unit.

The absorption costing approach to the income statement is used by companies for external financial reporting.

In determining whether to purchase a labor-saving machine,extreme resistance to the machine by employees would be a(n)________.

The contribution approach to the income statement emphasizes the distinction between ________.

Discriminatory pricing occurs when a firm sets ________.

Prices based on variable costs represent a contribution approach to pricing.

If the projected cost for a new product to be manufactured exceeds the target cost,what measures can the company undertake to reduce the projected cost?

A company will bid near the minimum sales price to establish a presence in new markets or with a new customer.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 5: Relevant Information for Decision Making With a Focus on Pricing Decisions

For internal decision-making purposes,many companies use the income statement using the ________ approach.For external reporting,most companies use the income statement using the ________ approach.

It is misleading to use the absorption costing income statement to predict the effect of changes in sales volume because ________.

In perfect competition,all firms charge the same market price.The only decision for managers is ________.

Full cost means the total of all variable manufacturing costs and all fixed manufacturing costs.

Market focus group studies and surveys may be used by a firm to determine the price of a product or service.

In imperfect competition,________.

The absorption approach to the income statement emphasizes the distinction between fixed and variable costs.

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 appliances.There is sufficient capacity available for the special order.What is relevant information for the decision whether to accept or reject the special order?

With perfect competition,marginal revenue is the additional revenue resulting from the sale of an additional unit.

The absorption costing approach to the income statement is used by companies for external financial reporting.

In determining whether to purchase a labor-saving machine,extreme resistance to the machine by employees would be a(n)________.

The contribution approach to the income statement emphasizes the distinction between ________.

Discriminatory pricing occurs when a firm sets ________.

Prices based on variable costs represent a contribution approach to pricing.

If the projected cost for a new product to be manufactured exceeds the target cost,what measures can the company undertake to reduce the projected cost?

A company will bid near the minimum sales price to establish a presence in new markets or with a new customer.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

For internal decision-making purposes,many companies use the income statement using the approach.For external reporting,most companies use the income statement using the approach.