ACCT 434 Week 5 Quiz

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ACCT 434 Week 5 Quiz

 1.Question :(TCO 7) Short-run pricing decisions include
Student Answer: 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.


Question 2.Question :(TCO 7) The first step in implementing target pricing and target costing is
Student Answer: choosing a target price.
 determining a target cost.
 developing a product that satisfies needs of potential customers.
 performing value engineering.

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Question 3.Question :(TCO 7) The amount of markup percentage is usually higher if
Student Answer: demand is elastic.
 competition is intense.
 there is idle capacity.
 demand is strong.


Question 4.Question :(TCO 7) Life-cycle budgeting is particularly important when
Student Answer: 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 are incurred before any revenues are received.


Question 5.Question :(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
Student Answer: 20%.
 66 2/3 %.


Question 6.Question :(TCO 8) A product may be passed from one subunit to another subunit in the same organization.  The product is known as
Student Answer: an interdepartmental product.
 an intermediate product.
 a subunit product.
 a transfer product.


Question 7.Question :(TCO 8) Transfer prices should be judged by whether they promote
Student Answer: goal congruence.
 the balanced scorecard method.
 a high level of subunit autonomy in decision making.
 Both 1 and 3 are correct.


Question 8.Question :(TCO 8) A benefit of using a market-based transfer price is the
Student Answer: 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.Question :(TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that
Student Answer: it promotes subunit autonomy.
 the divisions know the transfer price in advance.
 it usually provides a basis for optimal decision making.
 overall corporate profitability is usually higher.


Question 10.Question :(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?
Student Answer: $4



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