Question 1

Which of the following is true of value engineering?

Accepted Answer

A) It is the process of building a new product by first determining the selling price of the product. 
B) It is the process by which a company analyzes its own process to reduce cost. 
C) It is the process by which a systematic evaluation of all aspects of the value chain,with the objective of reducing costs and achieving a predetermined quality level. 
D) It is the process by which the competitor's products are disassembled and analyzed. 
A) It is the process of building a new product by first determining the selling price of the product. 
B) It is the process by which a company analyzes its own process to reduce cost. 
C) It is the process by which a systematic evaluation of all aspects of the value chain,with the objective of reducing costs and achieving a predetermined quality level. 
D) It is the process by which the competitor's products are disassembled and analyzed.

Question 2

Costing systems measure ________.

Accepted Answer

A) locked in costs 
B) sunk costs 
C) cost incurrence 
D) out of pocked costs 
A) locked in costs 
B) sunk costs 
C) cost incurrence 
D) out of pocked costs

Question 3

All costs are locked in at the design stage itself.

Accepted Answer

A) True 
 B)False

Question 4

Value engineering cannot decrease value-added costs.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true of price bidding with the federal government?

Accepted Answer

A) the price can only cover direct costs 
B) the price can only cover direct costs and marketing costs 
C) the price is based on costs that include fully allocated manufacturing and design costs but not include marketing costs 
D) the price can include only fixed manufacturing costs and design costs but not include marketing costs 
A) the price can only cover direct costs 
B) the price can only cover direct costs and marketing costs 
C) the price is based on costs that include fully allocated manufacturing and design costs but not include marketing costs 
D) the price can include only fixed manufacturing costs and design costs but not include marketing costs

Question 6

A full-cost formula for pricing does not require the management accountant to perform a detailed analysis of cost-behavior patterns.

Accepted Answer

A) True 
 B)False

Question 7

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:
 
For long-run pricing of the coffee tables,what price will most likely be used by Grounded Coffee?

Accepted Answer

A) $64.75 
B) $103.00 
C) $167.75 
D) $201.30 
A) $64.75 
B) $103.00 
C) $167.75 
D) $201.30

Question 8

Which of the following would make life-cycle budgeting particularly important to implement?

Accepted Answer

A) a very short R&D period with minimal costs but with an emphasis on speed to market 
B) a product that will be brought to market very quickly and will only be offered for a limited time 
C) the development period for a product is long and that the R&D needed and the design activities are costly 
D) a service that will be offered once this year and then eliminated as a result of a proposed sale of a division 
A) a very short R&D period with minimal costs but with an emphasis on speed to market 
B) a product that will be brought to market very quickly and will only be offered for a limited time 
C) the development period for a product is long and that the R&D needed and the design activities are costly 
D) a service that will be offered once this year and then eliminated as a result of a proposed sale of a division

Question 9

To minimize the chances of violating pricing laws,a company should ________.

Accepted Answer

A) keep detailed records of variable costs for all value-chain business functions 
B) use a variable cost-plus markup method of pricing 
C) underprice products on a consistent basis,rather than sporadically 
D) use dumping only when a product is at the end of its life cycle 
A) keep detailed records of variable costs for all value-chain business functions 
B) use a variable cost-plus markup method of pricing 
C) underprice products on a consistent basis,rather than sporadically 
D) use dumping only when a product is at the end of its life cycle

Question 10

Gracius Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers.Gracius Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity.The following per unit data apply for sales to regular customers:
 
For Gracius Manufacturing,what is the minimum acceptable price of this one-time-only special order?

Accepted Answer

A) $120 
B) $160 
C) $190 
D) $380 
A) $120 
B) $160 
C) $190 
D) $380

Question 11

Reverse engineering has the objective of reducing costs while still satisfying customer needs.

Accepted Answer

A) True 
 B)False

Question 12

In long-run pricing,decisions should consider all manufacturing and non-manufacturing costs but should consider all future direct and indirect costs as irrelevant.

Accepted Answer

A) True 
 B)False

Question 13

Block Island TV currently sells large televisions for $380.It has costs of $290.A competitor is bringing a new large television to market that will sell for $320.Management believes it must lower the price to $320 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 120,000 televisions per year.
What is the target cost if the company wants to maintain its same income level,and marketing is correct (rounded to the nearest cent)?

Accepted Answer

A) $224.00 
B) $238.18 
C) $230.00 
D) $290.00 
A) $224.00 
B) $238.18 
C) $230.00 
D) $290.00

Question 14

Grounded Coffee Products manufactures coffee tables.Grounded Coffee Products has a policy of adding a 10% markup to full costs and currently has excess capacity.The following information pertains to the company's normal operations per month:
 
Grounded Coffee Products is approached by an overseas customer to fulfill a one-time-only special order for 5000 units.All cost relationships remain the same except for a one-time setup charge of $60,000.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? (Round your final answer to the nearest cent. )

Accepted Answer

A) $184.00 
B) $484.00 
C) $172.00 
D) $238.00 
A) $184.00 
B) $484.00 
C) $172.00 
D) $238.00

Question 15

Sandra Clothing Company has invested $51,000,000 in its business.The target rate of return for the company is 12%.It has long-term assets of $23,000,000.Cost of debt for the company is 8%.It expects to sell 12,000 units in the upcoming year.What will be the target operating income per unit for Sandra Clothing Company?

Accepted Answer

A) $153 
B) $230 
C) $340 
D) $510 
A) $153 
B) $230 
C) $340 
D) $510

Question 16

Sales of Granite City Products Inc.have been on a steady decline for the last 12 months.A market research study conducted revealed that the product of Granite City Products Inc.can be sold only for $440 as opposed to the current market price charged of $540 per unit.Granite City Products Inc.has decided to revise its sales price to $440.The annual sales target volume of the product after price revision is 260 units.Granite City Products Inc.wants to earn 30% on its sales amount.
What are the target sales revenues?

Accepted Answer

A) $148,720 
B) $114,400 
C) $80,080 
D) $42,120 
A) $148,720 
B) $114,400 
C) $80,080 
D) $42,120

Question 17

A product costs $100 to manufacture and $40 to market and $20 to distribute (ship to customers. )R&D costs are allocated at $30 per unit.Based on a targeted rate of return,manager uses a mark-up of 60%.What is the markup component based on a Cost-Plus pricing approach?

Accepted Answer

A) $60 
B) $84 
C) $96 
D) $114 
A) $60 
B) $84 
C) $96 
D) $114

Question 18

When target costing and target pricing are used together ________.

Accepted Answer

A) the target cost is established first,then the target price 
B) the target cost is the estimated long-run cost that enables a product or service to achieve a desired profit 
C) the focus of target pricing is to undercut the competition 
D) target costs are generally higher than current costs 
A) the target cost is established first,then the target price 
B) the target cost is the estimated long-run cost that enables a product or service to achieve a desired profit 
C) the focus of target pricing is to undercut the competition 
D) target costs are generally higher than current costs

Question 19

Cost allocation data could be a valuable input to encourage design of products that are simpler to manufacture and less costly to service.

Accepted Answer

A) True 
 B)False

Question 20

Life-cycle costing is best described by which of the following?

Accepted Answer

A) it is a method of cost planning to reduce manufacturing costs to targeted levels 
B) it is the process of tracking and accumulating costs that are incurred within the manufacturing and distribution links of the value chain 
C) it is the process of tacking and accumulating business function costs across the entire value chain 
D) it is a costing system that focuses on reducing costs during the manufacturing cycle 
A) it is a method of cost planning to reduce manufacturing costs to targeted levels 
B) it is the process of tracking and accumulating costs that are incurred within the manufacturing and distribution links of the value chain 
C) it is the process of tacking and accumulating business function costs across the entire value chain 
D) it is a costing system that focuses on reducing costs during the manufacturing cycle

Which of the following is true of value engineering?

Costing systems measure ________.

All costs are locked in at the design stage itself.

Value engineering cannot decrease value-added costs.

Which of the following is true of price bidding with the federal government?

A full-cost formula for pricing does not require the management accountant to perform a detailed analysis of cost-behavior patterns.

Which of the following would make life-cycle budgeting particularly important to implement?

To minimize the chances of violating pricing laws,a company should ________.

Reverse engineering has the objective of reducing costs while still satisfying customer needs.

In long-run pricing,decisions should consider all manufacturing and non-manufacturing costs but should consider all future direct and indirect costs as irrelevant.

A product costs $100 to manufacture and $40 to market and $20 to distribute (ship to customers. )R&D costs are allocated at $30 per unit.Based on a targeted rate of return,manager uses a mark-up of 60%.What is the markup component based on a Cost-Plus pricing approach?

When target costing and target pricing are used together ________.

Cost allocation data could be a valuable input to encourage design of products that are simpler to manufacture and less costly to service.

Life-cycle costing is best described by which of the following?

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 true of value engineering?

Costing systems measure ________.

All costs are locked in at the design stage itself.

Value engineering cannot decrease value-added costs.

Which of the following is true of price bidding with the federal government?

A full-cost formula for pricing does not require the management accountant to perform a detailed analysis of cost-behavior patterns.

Which of the following would make life-cycle budgeting particularly important to implement?

To minimize the chances of violating pricing laws,a company should ________.

Reverse engineering has the objective of reducing costs while still satisfying customer needs.

In long-run pricing,decisions should consider all manufacturing and non-manufacturing costs but should consider all future direct and indirect costs as irrelevant.

A product costs $100 to manufacture and $40 to market and $20 to distribute (ship to customers. )R&D costs are allocated at $30 per unit.Based on a targeted rate of return,manager uses a mark-up of 60%.What is the markup component based on a Cost-Plus pricing approach?

When target costing and target pricing are used together ________.

Cost allocation data could be a valuable input to encourage design of products that are simpler to manufacture and less costly to service.

Life-cycle costing is best described by which of the following?

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