Question 1

Consolidated Corporation had the following information:

Accepted Answer

D

Question 2

The San Quintin Corporation manufactures automobile hub caps. In 2016, it expected to produce 385,000 hub caps at $6 per unit. The 2016 actual figures were 432,100 units which sold at $7 each.
Compute:
a. The Sales Price Variance
b. The Sales Volume Variance
c. The Overall (Total) Sales Variance Indicate whether Favorable or Unfavorable

Accepted Answer

a. Sales Price Variance = (Actual Price - Expected Price) × Αctual Volume
= ($7 - 6)432,000 = $432,100(F)
   b. Sales Volume Variance = (Actual Volume - Expected Volume) × Expected Price
= 432,100 - 385,000)$6 = $282,000(F)
   c. Overall (Total) Sales Variance = Sales Price Variance + Sales Volume Variance
= 432,000(F) + 282,000(F) = $714,000(F)

Question 3

Scottish Company manufactures a variety of toys and games. John Chisholm, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in 2016 when 30,000 were projected. Sales for 2017 look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed. What is the profit (loss) from Option Three?

Accepted Answer

A)  $110,000 
B)  $1,200,000 
C)  $215,000 
D)  ($60,000) 
A)  $110,000 
B)  $1,200,000 
C)  $215,000 
D)  ($60,000) C

Question 4

The following information pertains to Cumberland Corporation:   Absorption costing net income would be how much greater or less than the variable costing net income?

Accepted Answer

A)  $80,000 less than 
B)  $80,000 greater than 
C)  $60,000 greater than 
D)  $60,000 less than 
A)  $80,000 less than 
B)  $80,000 greater than 
C)  $60,000 greater than 
D)  $60,000 less than

Question 5

Too much emphasis on short-run optimization can lead to problems.

Accepted Answer

The answer of Too much emphasis on short-run optimization can...

Question 6

Firms enjoy greater success when they include the impact of profits on their employees and the community.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following markets is characterized by the following: a single firm in the industry, a unique product, and difficult entry into the industry?

Accepted Answer

A)  perfectly competitive market 
B)  monopolistic competition 
C)  monopoly 
D)  oligopoly 
A)  perfectly competitive market 
B)  monopolistic competition 
C)  monopoly 
D)  oligopoly

Question 8

Figure 18-1
The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Bayview sold 1,000,000 cases last year to the following types of customers:
   The drugstore chains have special handling costs of $0.20 a case and increased administrative assistance costing $45,000 per year.
The gas station chains require special marketing promotions that cost $50,000. Sales commissions of 10% are paid.
The supermarket chains order electronically through EDI which costs $25,000 annually. Bayview is responsible for shipping costs, which totaled $0.50 a case and special labels costing $0.02 per bottle
Local pharmacies have special handling costs of $0.10 per case and sales commissions are paid to agents costing
$0.25 per case. Bad debt expense averages 10% of sales.
-Refer to Figure 18-1. What is the profit per case for drugstore chains?

Accepted Answer

A)  $5.00 per case 
B)  $2.20 per case 
C)  $2.68 per case 
D)  $2.32 per case 
A)  $5.00 per case 
B)  $2.20 per case 
C)  $2.68 per case 
D)  $2.32 per case

Question 9

Johanson Company had the following information: Revenues $400,000
Cost of goods sold:
Direct materials $100,000 Direct labor 50,000
Overhead 50,000 200,000
Gross profit $200,000
Selling and administrative expenses
75,000
Operating income $125,000
    What is the markup based on prime costs?

Accepted Answer

A)  300.0% 
B)  166.7% 
C)  50.0% 
D)  133.3% 
A)  300.0% 
B)  166.7% 
C)  50.0% 
D)  133.3%

Question 10

Normandy Company has the following information pertaining to its two divisions for 2016:   What is the operating income for Normandy Company?

Accepted Answer

A)  $65,000 
B)  $325,000 
C)  $41,000 
D)  $300,000 
A)  $65,000 
B)  $325,000 
C)  $41,000 
D)  $300,000

Question 11

Scottish Company manufactures a variety of toys and games. John Chisholm, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in 2016 when 30,000 were projected. Sales for 2017 look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed. Which option is preferred?

Accepted Answer

A)  Options One and Three are equally preferred. 
B)  Option Three 
C)  Option Two 
D)  Option One 
A)  Options One and Three are equally preferred. 
B)  Option Three 
C)  Option Two 
D)  Option One

Question 12

The market share and market size variances allow firms to compare their performance with the:

Accepted Answer

A)  market as a whole 
B)  previous year's results 
C)  upcoming year's projections 
D)  inner workings of the company 
A)  market as a whole 
B)  previous year's results 
C)  upcoming year's projections 
D)  inner workings of the company

Question 13

The market size variance is favorable when the budgeted industry sales in units is:

Accepted Answer

A)  more than the actual units sold 
B)  less than the actual units sold 
C)  more than the actual market share percentage 
D)  less than the budgeted market share percentage 
A)  more than the actual units sold 
B)  less than the actual units sold 
C)  more than the actual market share percentage 
D)  less than the budgeted market share percentage

Question 14

The pricing of a new product at a low initial price to build market share quickly is called:

Accepted Answer

A)  Target costing 
B)  Predatory pricing 
C)  Price skimming 
D)  Penetration pricing 
A)  Target costing 
B)  Predatory pricing 
C)  Price skimming 
D)  Penetration pricing

Question 15

Sarandon Company has the following information pertaining to its two divisions for 2016:   What is the operating income for Sarandon Company?

Accepted Answer

A)  $300,000 
B)  $32,500 
C)  $150,000 
D)  $20,500 
A)  $300,000 
B)  $32,500 
C)  $150,000 
D)  $20,500

Question 16

The following information pertains to Cumberland Corporation:   What is the value of ending inventory using the absorption costing method?

Accepted Answer

A)  $410,000 
B)  $300,000 
C)  $600,000 
D)  $216,000 
A)  $410,000 
B)  $300,000 
C)  $600,000 
D)  $216,000

Question 17

The following information pertains to Guillotine Corporation:   What is the value of the ending inventory using the absorption costing method?

Accepted Answer

A)  $240,000 
B)  $360,000 
C)  $420,000 
D)  $600,000 
A)  $240,000 
B)  $360,000 
C)  $420,000 
D)  $600,000

Question 18

Discuss the limitation of profit measurement.

Accepted Answer

Profit is an important measure. It is li

Question 19

Which of the following statements is TRUE?

Accepted Answer

A)  Absorption costing net income exceeds variable costing net income when units produced and sold are equal. 
B)  Variable costing net income exceeds absorption costing net income when units produced exceed units sold. 
C)  Absorption costing net income exceeds variable costing net income when units produced are less than units sold. 
D)  Absorption costing net income exceeds variable costing net income when units produced are greater than units sold. 
A)  Absorption costing net income exceeds variable costing net income when units produced and sold are equal. 
B)  Variable costing net income exceeds absorption costing net income when units produced exceed units sold. 
C)  Absorption costing net income exceeds variable costing net income when units produced are less than units sold. 
D)  Absorption costing net income exceeds variable costing net income when units produced are greater than units sold.

Question 20

When firms with market power price products "too high", companies are:

Accepted Answer

A)  Price gouging 
B)  Price discrimination 
C)  Predatory prices 
D)  Penetration pricing 
A)  Price gouging 
B)  Price discrimination 
C)  Predatory prices 
D)  Penetration pricing

Consolidated Corporation had the following information:

The following information pertains to Cumberland Corporation: Absorption costing net income would be how much greater or less than the variable costing net income?

Too much emphasis on short-run optimization can lead to problems.

Firms enjoy greater success when they include the impact of profits on their employees and the community.

Which of the following markets is characterized by the following: a single firm in the industry, a unique product, and difficult entry into the industry?

Johanson Company had the following information: Revenues $400,000 Cost of goods sold: Direct materials $100,000 Direct labor 50,000 Overhead 50,000 200,000 Gross profit $200,000 Selling and administrative expenses 75,000 Operating income $125,000 What is the markup based on prime costs?

Normandy Company has the following information pertaining to its two divisions for 2016: What is the operating income for Normandy Company?

The market share and market size variances allow firms to compare their performance with the:

The market size variance is favorable when the budgeted industry sales in units is:

The pricing of a new product at a low initial price to build market share quickly is called:

Sarandon Company has the following information pertaining to its two divisions for 2016: What is the operating income for Sarandon Company?

The following information pertains to Cumberland Corporation: What is the value of ending inventory using the absorption costing method?

The following information pertains to Guillotine Corporation: What is the value of the ending inventory using the absorption costing method?

Discuss the limitation of profit measurement.

Which of the following statements is TRUE?

When firms with market power price products "too high", companies are:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 18: Pricing and Profitability Analysis

Consolidated Corporation had the following information:

The following information pertains to Cumberland Corporation: Absorption costing net income would be how much greater or less than the variable costing net income?

Too much emphasis on short-run optimization can lead to problems.

Firms enjoy greater success when they include the impact of profits on their employees and the community.

Which of the following markets is characterized by the following: a single firm in the industry, a unique product, and difficult entry into the industry?

Johanson Company had the following information: Revenues $400,000 Cost of goods sold: Direct materials $100,000 Direct labor 50,000 Overhead 50,000 200,000 Gross profit $200,000 Selling and administrative expenses 75,000 Operating income $125,000 What is the markup based on prime costs?

Normandy Company has the following information pertaining to its two divisions for 2016: What is the operating income for Normandy Company?

The market share and market size variances allow firms to compare their performance with the:

The market size variance is favorable when the budgeted industry sales in units is:

The pricing of a new product at a low initial price to build market share quickly is called:

Sarandon Company has the following information pertaining to its two divisions for 2016: What is the operating income for Sarandon Company?

The following information pertains to Cumberland Corporation: What is the value of ending inventory using the absorption costing method?

The following information pertains to Guillotine Corporation: What is the value of the ending inventory using the absorption costing method?

Discuss the limitation of profit measurement.

Which of the following statements is TRUE?

When firms with market power price products "too high", companies are:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters