Quiz 5
1. (TCO 7) Short-run pricing decisions include (Points : 3)
pricing a main product in a major market.
considering all costs in the value-chain of business
functions.
adjusting product mix and volume in a competitive market
while maintaining a stable price if demand fluctuates from strong to weak.
pricing for a special order with no long-term implications.
2. (TCO 7) The first step in implementing target pricing and target costing is (Points : 3)
choosing a target price.
determining a target cost.
developing a product that satisfies needs of potential
customers.
performing value engineering
3. (TCO 7) The markup percentage is usually higher if the cost base used is (Points : 3)
the full cost of the product.
the variable cost of the product.
variable manufacturing costs.
total manufacturing costs.
4. (TCO 7) Life-cycle costing is the name given to (Points : 3)
a method of cost planning to reduce manufacturing costs to
targeted levels.
the process of examining each component of a product to
determine whether its cost can be reduced. the process of managing all costs
along the value chain.
a system that focuses on reducing costs during the
manufacturing cycle.
5. (TCO 7) Each month, Haddon Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddon's monthly sales are $500,000. The markup percentage on variable costs to arrive at the existing (target) selling price is (Points : 3)
20%. 40%. 80%. 66
2/3 %.
6. (TCO 8) The benefits of a decentralized organization are greater when a company (Points : 3)
is large and unregulated.
is facing great uncertainties in their environment.
has few interdependencies among division.
All of the above
7. (TCO 8) A transfer-pricing method leads to goal congruence when managers (Points : 3)
always act in their own best interest.
act in their own best interest and the decision is in the
long-term best interest of the manager's subunit.
act in their own best interest and the decision is in the
long-term best interest of the company.
act in their own best interest and the decision is in the
short-term best interest of the company.
8. (TCO 8) A benefit of using a market-based transfer price is the (Points : 3)
profits of the transferring division are sacrificed for the
overall good of the corporation. profits of the division receiving the products
are sacrificed for the overall good of the corporation.
economic viability and profitability of each division can be
evaluated individually.
None of the above
9. (TCO 8) When companies do not want to use market prices or find it too costly, they typically use ________ prices, even though suboptimal decisions may occur. (Points : 3)
short-run average cost
long-run cost
average-cost
full-cost
10. (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit. Outlay cost is $4. What is the opportunity cost, assuming the seller sells internally?(Points : 3)
$4 $16 $20 $24
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