Exam 11: Strategic Cost Management

Luminous Company sells a product for $450 per unit. Its market share is 25 percent. The marketing manager feels that the market share can be increased to 33 percent with a reduction in price to $390. The product is currently earning a profit of $72 per unit. The president of Luminous Company feels that the $72 profit per unit must be maintained. What is the target price per unit?

Analyzing how costs and other financial factors vary as different bundles of activities are considered to strengthen a firm's strategic position is the process of

Figure 11-3 Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas: The following supplier information is given: Refer to Figure 11-3. What is the cost of supplier Z1?

A competitive advantage has been established when

Life-cycle cost management involves two types of life-cycle viewpoints: the marketing viewpoint and the production viewpoint.

The manufacturing which reduces inventory levels because production is geared to demand is called:

Exploiting supplier linkages is the exploitation of a firm's internal activities.

Harmonious Manufacturing Company sells a product for $200 per unit. Its market share is 18 percent of the units sold. The marketing manager feels that the market share can be increased to 25 percent of the units sold with a reduction in price to $170. The product is currently earning a profit of $32 per unit. The president of Harmonious Manufacturing Company feels that his company needs to maintain the same profit level per unit. The market share consists of $2,000,000 (10,000 units). Required:

The first link of the internal value chain is

The factor(s) that describe the relationships of a firm's value chain activities that are performed with its suppliers and customers is(are) called:

Dot Company sells a product for $225 per unit. Its market share is 20 percent. The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to $195. The product is currently earning a profit of $36 per unit. The president of Dot Company feels that the $36 profit per unit must be maintained. What is the original cost per unit?

MaximumTec has implemented JIT had the following transactions: Required:

At which stage of the consumable life-cycle is price sensitivity low?

A firm that has implemented JIT had the following transactions: What will be the entry to record materials placed into production using the backflush approach?

Strategic cost management emphasizes the importance of an external focus and the need to recognize and exploit internal and external linkages.

The stage during which a product loses market acceptance is called the __________ stage.

Prior to installing a JIT system, Clarendon Company used machine hours to assign maintenance costs to its three products of 6-inch, 8-inch, and 11-inch insulation. The maintenance costs totaled $400,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: After installing JIT, three manufacturing cells were created and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $400,000; however, these costs are now traceable to each cell. After installing JIT, the maintenance cost per roll of 11-inch insulation would be

Strategic decision making is important to achieve good inventory control.

A firm that has implemented JIT had the following transactions: What will be the entry to record material purchases using the backflush approach?

Prior to installing a JIT system, Grindstone Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 9-inch insulation. The maintenance costs totaled $432,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: After installing JIT, three manufacturing cells were created and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $432,000; however, these costs are now traceable to each cell. The maintenance cost per roll of 4-inch insulation before JIT is installed would be