Question 1

Target cost equals target price plus profit margin.

Accepted Answer

A) True 
 B)False  False

Question 2

Four categories of costs associated with product quality are:

Accepted Answer

A) External failure,internal failure,prevention,and carrying. 
B) External failure,internal failure,prevention,and appraisal. 
C) External failure,internal failure,training,and appraisal. 
D) Warranty,product liability,prevention,and training. 
A) External failure,internal failure,prevention,and carrying. 
B) External failure,internal failure,prevention,and appraisal. 
C) External failure,internal failure,training,and appraisal. 
D) Warranty,product liability,prevention,and training. B

Question 3

Just-in-time manufacturing systems are also known as:

Accepted Answer

A) Supply push systems. 
B) Supply pull systems. 
C) Demand push systems. 
D) Demand pull systems. 
A) Supply push systems. 
B) Supply pull systems. 
C) Demand push systems. 
D) Demand pull systems. D

Question 4

Value-added activities add to a product's desirability from the manufacturer's perspective.

Accepted Answer

A) True 
 B)False

Question 5

The just-in-time manufacturing system:

Accepted Answer

A) Contrasts with the supply push systems. 
B) Complements the supply push systems. 
C) Neither complements nor contrasts with the supply push systems. 
D) Contrasts the demand pull system. 
A) Contrasts with the supply push systems. 
B) Complements the supply push systems. 
C) Neither complements nor contrasts with the supply push systems. 
D) Contrasts the demand pull system.

Question 6

Activity-based costing systems refer to acquiring materials and manufacturing goods only as needed to fill customers' orders.

Accepted Answer

A) True 
 B)False

Question 7

"Six Sigma" describes the length of time it takes a product to pass through the six stages of manufacturing,from processing through inspection.

Accepted Answer

A) True 
 B)False

Question 8

The identification of a target price for a newly designed product or service is focused on:

Accepted Answer

A) The expected costs of production. 
B) The required profit margin. 
C) The prices charged by existing and potential competitors. 
D) Customers and their functional requirements. 
A) The expected costs of production. 
B) The required profit margin. 
C) The prices charged by existing and potential competitors. 
D) Customers and their functional requirements.

Question 9

A quality cost report would be comprised of prevention costs only.

Accepted Answer

A) True 
 B)False

Question 10

Target costing
Ray-Dee,Inc.is considering the introduction of a new deluxe quality stereo tabletop radio.This radio will produce exceptional sound quality through new speaker technology.Market research indicates that customers would be willing to pay $400 for a radio of the quality considered.Ray-Dee requires a 30% return on sales for all its products.
Required: Compute Ray-Dee's target cost for the radio under consideration.

Accepted Answer

The answer of Target costing
Ray-Dee,Inc.is considering the introduction of a...

Question 11

An effective just-in-time system will include:

Accepted Answer

A) Specialized employees. 
B) An efficient plant layout. 
C) Sizable inventories of raw materials. 
D) Many suppliers. 
A) Specialized employees. 
B) An efficient plant layout. 
C) Sizable inventories of raw materials. 
D) Many suppliers.

Question 12

[The following information applies to the questions displayed below.]
The Abrams Corporation incurred the following quality costs for the year ending December 31,2018:
  
-What are the total internal failure costs for the Abrams Corporation?

Accepted Answer

A) $38,300 
B) $34,500 
C) $19,700 
D) $35,250 
A) $38,300 
B) $34,500 
C) $19,700 
D) $35,250

Question 13

The development of activity-based cost information is a necessary prerequisite to activity-based management.

Accepted Answer

A) True 
 B)False

Question 14

International Financial Reporting Standards (IFRS)require companies to expense costs associated with R&D activities.

Accepted Answer

A) True 
 B)False

Question 15

A primary objective of target costing is to reduce development time.

Accepted Answer

A) True 
 B)False

Question 16

During cycle time,value is added only during:

Accepted Answer

A) Processing time. 
B) Storage and waiting time. 
C) Movement time. 
D) Inspection time. 
A) Processing time. 
B) Storage and waiting time. 
C) Movement time. 
D) Inspection time.

Question 17

[The following information applies to the questions displayed below.]
Summit Products,Inc.is interested in producing and selling an improved widget.Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price.The current cost to produce the widget is estimated to be $65.
-At a price of $80,Summit's market research indicates that it can sell 60,000 units per year.Assuming Summit can reach its new target cost,how will Summit's profit at the $80 price compare to what it would have earned in the absence of the competitor's product?

Accepted Answer

A) Profit will be $75,000 higher. 
B) Profit will be $75,000 lower. 
C) Profit will be unaffected if Summit can reach the revised target cost. 
D) Profit will be $37,500 higher. 
A) Profit will be $75,000 higher. 
B) Profit will be $75,000 lower. 
C) Profit will be unaffected if Summit can reach the revised target cost. 
D) Profit will be $37,500 higher.

Question 18

Activity-based management is a subset of activity-based costing.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are components of the value chain except:

Accepted Answer

A) Research and design activities. 
B) Obtaining raw materials. 
C) Supporting the product after it is sold. 
D) Maintaining large inventories so that orders can be filled promptly. 
A) Research and design activities. 
B) Obtaining raw materials. 
C) Supporting the product after it is sold. 
D) Maintaining large inventories so that orders can be filled promptly.

Question 20

As a percentage of total costs,which quality cost category is the highest?

Accepted Answer

A) Prevention 
B) Internal failure 
C) Appraisal 
D) External failure 
A) Prevention 
B) Internal failure 
C) Appraisal 
D) External failure

Exam 19: Costing and the Value Chain

Target cost equals target price plus profit margin.

Four categories of costs associated with product quality are:

Just-in-time manufacturing systems are also known as:

Value-added activities add to a product's desirability from the manufacturer's perspective.

The just-in-time manufacturing system:

Activity-based costing systems refer to acquiring materials and manufacturing goods only as needed to fill customers' orders.

"Six Sigma" describes the length of time it takes a product to pass through the six stages of manufacturing,from processing through inspection.

The identification of a target price for a newly designed product or service is focused on:

A quality cost report would be comprised of prevention costs only.

An effective just-in-time system will include:

[The following information applies to the questions displayed below.] The Abrams Corporation incurred the following quality costs for the year ending December 31,2018: -What are the total internal failure costs for the Abrams Corporation?

The development of activity-based cost information is a necessary prerequisite to activity-based management.

International Financial Reporting Standards (IFRS)require companies to expense costs associated with R&D activities.

A primary objective of target costing is to reduce development time.

During cycle time,value is added only during:

Activity-based management is a subset of activity-based costing.

All of the following are components of the value chain except:

As a percentage of total costs,which quality cost category is the highest?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters