Question 1

Which of the following is the best description of price discrimination?

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

Question 2

Long-run pricing is an operational decision and not a strategic decision as perceived by many.

Accepted Answer

A) True 
 B)False

Question 3

Block Island TV currently sells large televisions for $380.It has costs of $320.A competitor is bringing a new large television to market that will sell for $360.Management believes it must lower the price to $360 to compete in the market for large televisions.Marketing believes that the new price will cause sales to increase by 10%,even with a new competitor in the market.Block Island TV sales are currently 150,000 televisions per year.
What is the change in operating income if marketing is correct and only the sales price is changed?

Accepted Answer

A) $6,600,000 
B) $3,000,000 
C) $(6,600,000) 
D) ($2,400,000) 
A) $6,600,000 
B) $3,000,000 
C) $(6,600,000) 
D) ($2,400,000)

Question 4

Companies must always examine their pricing ________.

Accepted Answer

A) based on the supply of the product 
B) based on the full cost of producing the product and price to make a profit 
C) through the eyes of their customers and then manage costs to produce a profit 
D) based on the GAAP cost of producing the product and then add a mark-up 
A) based on the supply of the product 
B) based on the full cost of producing the product and price to make a profit 
C) through the eyes of their customers and then manage costs to produce a profit 
D) based on the GAAP cost of producing the product and then add a mark-up

Question 5

Which of the following 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 target return on investment 
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 target return on investment

Question 6

Expo Manufacturing Inc. ,is in the process of evaluating a new product using the following information:
 
What are estimated life-cycle revenues?

Accepted Answer

A) $612,000 
B) $1,254,600 
C) $1,897,200 
D) $1,927,800 
A) $612,000 
B) $1,254,600 
C) $1,897,200 
D) $1,927,800

Question 7

Ocean Grove Vending Company has invested $980,000 in a plant to make vending machines.The target operating income desired from the plant is $196,000 annually.The company plans annual sales of 1600 vending machines at a selling price of $1100 each.
What is the cost base of each vending machine for Ocean Grove Vending Company?

Accepted Answer

A) $1100 
B) $1422 
C) $978 
D) $613 
A) $1100 
B) $1422 
C) $978 
D) $613

Question 8

Zolas' Heaters is approached by Ms.Leila,a new customer,to fulfill a large one-time-only special order for a product similar to one offered to regular customers.Zolas' Heaters has excess capacity.The following per unit data apply for sales to regular customers:
 
If Ms.Leila wanted a long-term commitment,and not a one-time-special order,for supplying this product,calculate the most likely price to be quoted assuming the markup remains the same?

Accepted Answer

A) $790 
B) $590 
C) $520 
D) $1027 
A) $790 
B) $590 
C) $520 
D) $1027

Question 9

Cool Air Inc. ,manufactures single room sized air conditioners.The cost accounting system estimates manufacturing costs to be $250 per air conditioner,consisting of 80% variable costs and 20% fixed costs.The company has surplus capacity available.It is Cool Air Inc.'s policy to add a 30% markup to full costs.
A medium sized motel chain is currently expanding and has decided to create more rooms and air condition all of its rooms,which are currently not air conditioned.Cool Air Inc.is invited to submit a bid to the motel chain.What per unit price will Cool Air Inc.most likely bid for this special order of 200 units? Assume that the price is being fixed for a long-term commitment.

Accepted Answer

A) $250.00 per unit 
B) $200.00 per unit 
C) $325.00 per unit 
D) $300.00 per unit 
A) $250.00 per unit 
B) $200.00 per unit 
C) $325.00 per unit 
D) $300.00 per unit

Question 10

A company's invested capital is $13,000,000 and management has determined that the target rate of return on investment is 10%.Last year,the company produced 131,313 units and this year expects to units sales to be 10% above last year.The cost of the product is estimated to be $13 per unit.What is the target operating income per unit? (Round any intermediary calculations to the nearest unit and your final answer to the nearest cent. )

Accepted Answer

A) $9.00 
B) $9.90 
C) $13.00 
D) $6.50 
A) $9.00 
B) $9.90 
C) $13.00 
D) $6.50

Question 11

What are the undesirable effects of value engineering and target costing? How can these be reduced?

Accepted Answer

Unless managed properly,value engineerin

Question 12

A non-value-added cost is a cost that,if eliminated,would reduce the actual or perceived value or utility (usefulness)customers experience from using the product or service.

Accepted Answer

A) True 
 B)False

Question 13

Wilde Corporation budgeted the following costs for the production of its one and only product for the next fiscal year:
$\begin{array}{ll}
\text { Direct materials } & \$ 1,125,000 \
\text { Direct labor } & 775,000 \
\text { Manufacturing overhead } & \
\quad \text { Variable } & 850,000 \
\quad \text { Fixed } & 680,000 \
\text { Selling and administrative } & \
\quad \text { Variable } & 380,000 \
\quad \text { Fixed } & \underline{\$ 10,000} \
\text { Total costs } & \underline{\$ 4,320,000}
\end{array}$
Wilde has an annual target operating income of $920,000.
The markup percentage for setting prices as a percentage of total manufacturing costs is ________.

Accepted Answer

A) 52.8% 
B) 78.5% 
C) 214.2% 
D) 41.7% 
A) 52.8% 
B) 78.5% 
C) 214.2% 
D) 41.7%

Question 14

In case of pricing for special orders,managers include all future costs,variable costs,and costs that are fixed in the short run.

Accepted Answer

A) True 
 B)False

Question 15

Market research can be an effective tool in understanding the features customers value.

Accepted Answer

A) True 
 B)False

Question 16

Which f the following methods focuses on reducing costs during the manufacturing stage?

Accepted Answer

A) Target costing 
B) Kaizen costing 
C) Cost-plus pricing 
D) Life-cycle costing 
A) Target costing 
B) Kaizen costing 
C) Cost-plus pricing 
D) Life-cycle costing

Question 17

Which of the following costs can be classified into both value-added and non-value-added costs?

Accepted Answer

A) production control costs 
B) machine breakdown costs 
C) rework costs 
D) direct material costs 
A) production control costs 
B) machine breakdown costs 
C) rework costs 
D) direct material costs

Question 18

Cool Air Inc. ,manufactures single room sized air conditioners.The cost accounting system estimates manufacturing costs to be $230 per air conditioner,consisting of 60% variable costs and 40% fixed costs.The company has surplus capacity available.It is Cool Air Inc.'s policy to add a 30% markup to full costs.
Cool Air Inc. ,is invited to bid on a one-time-only special order to supply 110 air conditioners.What is the lowest price Cool Air Inc.should bid on this special order?

Accepted Answer

A) $15,180 
B) $25,300 
C) $35,420 
D) $32,890 
A) $15,180 
B) $25,300 
C) $35,420 
D) $32,890

Question 19

Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division.
 
What are the estimated life-cycle revenues?

Accepted Answer

A) $3,000,000 
B) $3,340,000 
C) $3,670,000 
D) $1,500,000 
A) $3,000,000 
B) $3,340,000 
C) $3,670,000 
D) $1,500,000

Question 20

A locked-in cost is a(n)________.

Accepted Answer

A) opportunity cost that is fixed in the short run 
B) cost that can be changed in the short run 
C) cost that has not yet been incurred,but based on decisions that have already been made,will be incurred in the future 
D) cost that has been incurred,but based on decisions that have already been made,will be not incurred in the future 
A) opportunity cost that is fixed in the short run 
B) cost that can be changed in the short run 
C) cost that has not yet been incurred,but based on decisions that have already been made,will be incurred in the future 
D) cost that has been incurred,but based on decisions that have already been made,will be not incurred in the future

Which of the following is the best description of price discrimination?

Long-run pricing is an operational decision and not a strategic decision as perceived by many.

Companies must always examine their pricing ________.

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

Expo Manufacturing Inc. ,is in the process of evaluating a new product using the following information: What are estimated life-cycle revenues?

What are the undesirable effects of value engineering and target costing? How can these be reduced?

A non-value-added cost is a cost that,if eliminated,would reduce the actual or perceived value or utility (usefulness)customers experience from using the product or service.

In case of pricing for special orders,managers include all future costs,variable costs,and costs that are fixed in the short run.

Market research can be an effective tool in understanding the features customers value.

Which f the following methods focuses on reducing costs during the manufacturing stage?

Which of the following costs can be classified into both value-added and non-value-added costs?

Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division. What are the estimated life-cycle revenues?

A locked-in cost is a(n)________.

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 is the best description of price discrimination?

Long-run pricing is an operational decision and not a strategic decision as perceived by many.

Companies must always examine their pricing ________.

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

Expo Manufacturing Inc. ,is in the process of evaluating a new product using the following information: What are estimated life-cycle revenues?

What are the undesirable effects of value engineering and target costing? How can these be reduced?

A non-value-added cost is a cost that,if eliminated,would reduce the actual or perceived value or utility (usefulness)customers experience from using the product or service.

In case of pricing for special orders,managers include all future costs,variable costs,and costs that are fixed in the short run.

Market research can be an effective tool in understanding the features customers value.

Which f the following methods focuses on reducing costs during the manufacturing stage?

Which of the following costs can be classified into both value-added and non-value-added costs?

Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division. What are the estimated life-cycle revenues?

A locked-in cost is a(n)________.

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