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| 1 | |
Which of the following has a major influence on pricing decisions? |
| | A) | Customer demand |
| | B) | Actions of competitors |
| | C) | Costs |
| | D) | Political, legal, and image-related issues |
| | E) | All of the above |
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| 2 | |
Which of the following curves shows the relationship between the sales price and the quantity of units demanded? |
| | A) | Marginal cost curve |
| | B) | Marginal revenue curve |
| | C) | Demand curve |
| | D) | Total cost curve |
| | E) | Revenue curve |
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| 3 | |
Which of the following curves graphs the relationship between total cost and the quantity produced and sold each month? |
| | A) | Marginal cost curve |
| | B) | Marginal revenue curve |
| | C) | Demand curve |
| | D) | Total cost curve |
| | E) | Total revenue curve |
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| 4 | |
Consider the following price and cost information: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856415/ch15_4.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (20.0K)</a>]]>
* Based on planned monthly production of 100 units per month.
Using a markup percentage on total cost of 35%, calculate the selling price. |
| | A) | $2,115 |
| | B) | $1,215 |
| | C) | $900 |
| | D) | $2,120 |
| | E) | $950 |
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| 5 | |
Consider the following: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856415/ch15_5.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (13.0K)</a>]]>
To the nearest tenth, what is the markup percentage required to earn the target return on investments using the cost-plus formula based on total costs? |
| | A) | 22.9% |
| | B) | 40.0% |
| | C) | 20.0% |
| | D) | 65.7% |
| | E) | 63.4% |
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| 6 | |
Consider the following:  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856415/ch15_6.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (14.0K)</a>]]>
To the nearest tenth, what is the markup percentage required to earn the target return on investment using the cost-plus formula based on total variable costs? |
| | A) | 22.9% |
| | B) | 65.7% |
| | C) | 115.0% |
| | D) | 153.3% |
| | E) | 148.5% |
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| 7 | |
The markup percentage under cost-plus pricing based on total variable cost is 115.0%. Total variable costs are $200,000 and total fixed costs are $150,000, based on a 500 unit annual volume. Use the total variable-cost pricing method and calculate the per-unit selling price. |
| | A) | $700 |
| | B) | $805 |
| | C) | $860 |
| | D) | $460 |
| | E) | $400 |
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| 8 | |
What is the numerator in the general formula for computing the markup percentage in cost-plus pricing to achieve a target return on investment (ROI)? |
| | A) | The profit required to achieve target ROI + Total annual costs not included in cost base. |
| | B) | The profit required to achieve target ROI + Total annual fixed costs. |
| | C) | The profit required to achieve target ROI + Total variable cost per unit. |
| | D) | The profit required to achieve target ROI + Total annual costs. |
| | E) | The profit required to achieve target ROI + Total annual costs – fixed costs |
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| 9 | |
Which of the following is a true statement regarding target costing? |
| | A) | It has a price-led costing approach that can be expressed as:
Target Price= Target Cost + Target Profit |
| | B) | When using target costing, life cycle costs are not considered relevant costs. |
| | C) | A penetration pricing model would be an example of target costing. |
| | D) | Profit margin is calculated before cost is measured. |
| | E) | Implementation of target costing will likely involve cross functional teams and process improvement strategies. |
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| 10 | |
Consider the following: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856415/ch15_10.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (21.0K)</a>]]>
What should be the hourly labor cost charged to jobs? |
| | A) | $23.00 |
| | B) | $ 7.00 |
| | C) | $17.42 |
| | D) | $33.50 |
| | E) | $19.50 |
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| 11 | |
Consider the following:  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856415/ch15_11.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (26.0K)</a>]]>
What should be the material handling and storage cost per dollar of material? |
| | A) | $0.01 |
| | B) | $0.10 |
| | C) | $1.00 |
| | D) | $1.10 |
| | E) | $1.11 |
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| 12 | |
Which of the following statements is false when examining the roles of activity-based costing (ABC) in setting a target cost, how product-cost pricing can undermine a firm's pricing strategy, and the roll of value engineering in target costing? |
| | A) | Activity-based costing (ABC) enables designers to break down the production process of a new product into its component parts. |
| | B) | Use of a traditional, volume-based product-costing system seldom results in significant cost distortion among product lines. |
| | C) | Target costing is an outgrowth of the concept of value engineering. |
| | D) | A manufacturer's computer-aided design and cost-accounting software are interconnected under computer-integrated manufacturing (CIM), and the process of target costing is sometimes computerized. |
| | E) | All of the above are false |
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| 13 | |
Lakeland Corporation is involved in a competitive bidding situation. Lakeland allocates variable and fixed overhead to jobs based on direct labor dollars. Costs related to the project are estimated as follows: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856415/ch15_13_14.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (7.0K)</a>]]>
Which of the above costs should be used in setting the minimum bid price assuming that Lakeland has no excess capacity? |
| | A) | $375,000 |
| | B) | $900,000 |
| | C) | $700,000 |
| | D) | $575,000 |
| | E) | None of the above |
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| 14 | |
Lakeland Corporation is involved in a competitive bidding situation. Lakeland allocates variable and fixed overhead to jobs based on direct labor dollars. Costs related to the project are estimated as follows:<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856415/ch15_13_14.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (7.0K)</a>]]> Which of the above costs should be used in setting the minimum bid price assuming that Lakeland has excess capacity? |
| | A) | $375,000 |
| | B) | $900,000 |
| | C) | $700,000 |
| | D) | $575,000 |
| | E) | None of the above |
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| 15 | |
Which of the following pricing strategies is prohibited by law? |
| | A) | Predatory pricing. |
| | B) | Skimming pricing. |
| | C) | Penetration pricing. |
| | D) | Target costing. |
| | E) | Competitive pricing |
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