| . (TCO 7) Major influences of competitors, costs, and customers on pricing decisions are factors of (Points : 5) |
supply and demand.
activity-based costing and activity-based management.
key management themes that are important to managers attaining success in their planning and control decisions.
the value-chain concept. |
| Question 2.2. (TCO 7) The first step in implementing target pricing and target costing is (Points : 5) |
choosing a target price.
determining a target cost.
developing a product that satisfies needs of potential customers.
performing value engineering. |
| Question 3.3. (TCO 7) The markup percentage is usually higher if the cost base used is (Points : 5) |
the full cost of the product.
the variable cost of the product.
variable manufacturing costs.
total manufacturing costs. |
| Question 4.4. (TCO 7) Life-cycle budgeting is particularly important when (Points : 5) |
the development period for R & D is short and inexpensive.
there are significant nonproduction costs.
most costs are locked in during production.
a low percentage of costs is incurred before any revenues are received. |
| Question 5.5. (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 : 5) |
20%.
40%.
80%.
66 2/3%. |
| Question 6.6. (TCO 8) The benefits of a decentralized organization are greater when a company (Points : 5) |
is large and unregulated.
is facing great uncertainties in their environment.
has few interdependencies among division.
All of the above |
| Question 7.7. (TCO 8) Transfer prices should be judged by whether they promote (Points : 5) |
goal congruence.
the balanced scorecard method.
a high level of subunit autonomy in decision making.
Both 1 and 3 are correct. |
| Question 8.8. (TCO 8) A benefit of using a market-based transfer price is the (Points : 5) |
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 |
| Question 9.9. (TCO 8) The range over which two divisions will negotiate a transfer price is (Points : 5) |
between the supplying division’s variable cost and the market price of the product.
between the supplying division’s variable cost and its full cost of the product.
anywhere above the supplying division’s full cost of the product.
between the supplying division’s full cost and 180% above its full cost. |
| Question 10.10. (TCO 8) Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound and Division B incurs an additional cost of $2.50 per pound. What is Division A’s operating income per pound, assuming the transfer price of the soybean paste is set at $1.25 per pound? (Points : 5) |
$0.50
$0.875
$1.250
$1.625 |
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