Question 1

Kaizen costing concepts can be applied to:

Accepted Answer

A)  Fixed costs only 
B)  Both variable and fixed costs 
C)  Variable costs only 
D)  Mixed costs only 
A)  Fixed costs only 
B)  Both variable and fixed costs 
C)  Variable costs only 
D)  Mixed costs only

Question 2

If an organisation is able to charge extra to a customer who consumes greater company resources then the fact that they require extra servicing is not a problem.

Accepted Answer

A) True 
 B)False

Question 3

PLM's managers are attempting to build a new product, a better mousetrap. They began by determining the features customers wanted and what they would pay for those features. PLM's engineers then reverse-engineered a competitor's product to understand its design and related production processes. Their analysis indicated that customers would pay $10.00 for a better mousetrap. What process did PLM use according to the preceding scenario?

Accepted Answer

A)  Value chain costing 
B)  Target costing 
C)  Kaizen costing 
D)  Life cycle costing 
A)  Value chain costing 
B)  Target costing 
C)  Kaizen costing 
D)  Life cycle costing

Question 4

List one advantage and one disadvantage for using target and kaizen costing.

Accepted Answer

A common advantage for both target and k

Question 5

Paul's Recycling accepts and recycles or disposes of hazardous waste for the city. It charges the city for waste disposal based on the amount of waste handled. Its contract specifies the sites that have been set up for waste drop-off will be cleaned up completely when the contract eventually expires. The owners of Paul's have been contacted by the council to set up a similar service for people who live in the area. Roland's accountant is preparing an analysis for the owners. Recommend an appropriate costing method. Describe the method and explain the reasons for your choice.

Accepted Answer

When products incur high start-up costs

Question 6

When managers take advantage of an unusual event by charging prices that consumers believe are too high, they are practicing:

Accepted Answer

A)  Price gouging 
B)  Cost-based pricing 
C)  Predatory pricing 
D)  Illegal pricing 
A)  Price gouging 
B)  Cost-based pricing 
C)  Predatory pricing 
D)  Illegal pricing

Question 7

Which of the following is a formal method for incorporating demand into prices?

Accepted Answer

A)  Market-based pricing 
B)  Price elasticity of demand 
C)  Cost-based pricing 
D)  Price elasticity of supply 
A)  Market-based pricing 
B)  Price elasticity of demand 
C)  Cost-based pricing 
D)  Price elasticity of supply

Question 8

Paris Perfumery sells two perfumes, L'Amor and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows: $\begin{array} { l  }
& \text { L'Amour }& \text { Plaisir } & \text { Total } \
\text { Sales } \quad(10,000 \text { units) }&\$600,000 (150,000 \text { units)}&\$400,000&\$1,000,000\
\text { Variable costs }&200,000&230,000&430,000\\text { Contribution Margin }&\$400,000&\$170,000&\$570,000\
\end{array}$

During the period there was an economic downturn. Sales of L'Amour dropped off, so Paris reduced its price. Actual sales were as follows:

$\begin{array} { l  }
& \text { L'Amour }& \text { Plaisir } & \text { Total } \
\text { Sales } \quad(7,500 @ \$ 45)&\$ 337,500(36,000 @ \$ 8)&\$28/8,000&\$625,500\
\text { Variable costs }&165,000&153,000&318,000\
\text { Contribution Margin }&\$172,500&\$135,000&\$307,500
\end{array}$ The revenue volume variance for L'Amour was:

Accepted Answer

A)  $150,000 F 
B)  $262,500 U 
C)  $150,000 U 
D)  $112,000 U 
A)  $150,000 F 
B)  $262,500 U 
C)  $150,000 U 
D)  $112,000 U

Question 9

Market-based prices are influenced by all of the following except:

Accepted Answer

A)  Product differentiation 
B)  Competition 
C)  Customer demand 
D)  Allocated costs 
A)  Product differentiation 
B)  Competition 
C)  Customer demand 
D)  Allocated costs

Question 10

Kaizen costing is a technique aimed at improvement of short-term profitability.

Accepted Answer

A) True 
 B)False

Question 11

Which pricing method is used to capture market share by charging low introductory prices?

Accepted Answer

A)  Price gouging 
B)  Price skimming 
C)  Penetration pricing 
D)  Peak load pricing 
A)  Price gouging 
B)  Price skimming 
C)  Penetration pricing 
D)  Peak load pricing

Question 12

More profitable customers are more likely to:

Accepted Answer

A)  pay on time 
B)  demand discounts 
C)  place more small orders 
D)  return goods more frequently 
A)  pay on time 
B)  demand discounts 
C)  place more small orders 
D)  return goods more frequently

Question 13

Managers determine what a customer is willing to pay for a product or service under which one of these pricing method?

Accepted Answer

A)  Cost-based 
B)  Activity-based 
C)  Market-based 
D)  Life cycle 
A)  Cost-based 
B)  Activity-based 
C)  Market-based 
D)  Life cycle

Question 14

TMG produces and sells yachts for wealthy customers. TMG's accountants produced the data shown below as a basis for client negotiations for the coming year: $\begin{array}{lccc}
&\underline{\text { Big Winner}}&\underline{\text { Sport Star }} &\underline{\text {CEO }}\
\text { Basic yacht } & \$ 600 & \$ 600 & \$ 600 \
\text { Customisation costs } & 300 & 500 & 200 \
\text { Marketing costs } &\underline{ 100 }&\underline{ 400} & \underline{300 }\
\quad \text { Total costs } &\underline{ \$ 1,000} & \$ \underline{\$ 1,500}&\underline{ \$ 1,100 }
\end{array}$

Assume that all the preceding costs are avoidable. The company will incur an additional $800 in unavoidable costs during the coming year. TMG's managers want to achieve a profit margin of 80% based on total costs. Suppose TMG allocates unavoidable corporate costs based on total avoidable costs. The selling price of Sport Star's yacht will be:

Accepted Answer

A)  $3,300 
B)  $1,467 
C)  $1,833 
D)  $2,200 
A)  $3,300 
B)  $1,467 
C)  $1,833 
D)  $2,200

Question 15

Compare and contrast target costing with kaizen costing.

Accepted Answer

The following are similarities between t

Question 16

Not-for-profit organisations price products in the same manner as for-profit organisations.

Accepted Answer

A) True 
 B)False

Question 17

The price does not need to cover costs for what kinds of organisations?

Accepted Answer

A)  For profit retail sales organisations 
B)  Not-for-profit organisations 
C)  All types of for-profit organisations 
D)  For profit manufacturing organisations 
A)  For profit retail sales organisations 
B)  Not-for-profit organisations 
C)  All types of for-profit organisations 
D)  For profit manufacturing organisations

Question 18

Target costing is a technique to improve long-term profitability by considering product costs at the design phase.

Accepted Answer

A) True 
 B)False

Question 19

PLM's managers are attempting to build a new product, a better mousetrap. They began by determining the features customers wanted and what they would pay for those features. PLM's engineers then reverse-engineered a competitor's product to understand its design and related production processes. Their analysis indicated that customers would pay $10.00 for a better mousetrap. If PLM's required profit margin is 25%, the target cost of a better mousetrap is:

Accepted Answer

A)  $7.50 
B)  $12.50 
C)  $2.50 
D)  None of the above 
A)  $7.50 
B)  $12.50 
C)  $2.50 
D)  None of the above

Question 20

TMG produces and sells yachts for wealthy customers. TMG's accountants produced the data shown below as a basis for client negotiations for the coming year: $\begin{array}{lccc}
&\underline{\text { Big Winner}}&\underline{\text { Sport Star }} &\underline{\text {CEO }}\
\text { Basic yacht } & \$ 600 & \$ 600 & \$ 600 \
\text { Customisation costs } & 300 & 500 & 200 \
\text { Marketing costs } &\underline{ 100 }&\underline{ 400} & \underline{300 }\
\quad \text { Total costs } &\underline{ \$ 1,000} & \$ \underline{\$ 1,500}&\underline{ \$ 1,100 }
\end{array}$
 Assume that all the preceding costs are avoidable. The company will incur an additional $800 in unavoidable costs during the coming year. TMG's managers want to achieve a profit margin of 80% based on total costs. If unavoidable costs are allocated as a percentage of avoidable costs, the total cost of Sport Star's yacht will be:

Accepted Answer

A)  $2,300 
B)  $1,833 
C)  $1,500 
D)  $1,167 
A)  $2,300 
B)  $1,833 
C)  $1,500 
D)  $1,167

Kaizen costing concepts can be applied to:

If an organisation is able to charge extra to a customer who consumes greater company resources then the fact that they require extra servicing is not a problem.

List one advantage and one disadvantage for using target and kaizen costing.

When managers take advantage of an unusual event by charging prices that consumers believe are too high, they are practicing:

Which of the following is a formal method for incorporating demand into prices?

Market-based prices are influenced by all of the following except:

Kaizen costing is a technique aimed at improvement of short-term profitability.

Which pricing method is used to capture market share by charging low introductory prices?

More profitable customers are more likely to:

Managers determine what a customer is willing to pay for a product or service under which one of these pricing method?

Compare and contrast target costing with kaizen costing.

Not-for-profit organisations price products in the same manner as for-profit organisations.

The price does not need to cover costs for what kinds of organisations?

Target costing is a technique to improve long-term profitability by considering product costs at the design phase.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

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Exam 14: The Strategic Management of Costs and Revenues

Kaizen costing concepts can be applied to:

If an organisation is able to charge extra to a customer who consumes greater company resources then the fact that they require extra servicing is not a problem.

List one advantage and one disadvantage for using target and kaizen costing.

When managers take advantage of an unusual event by charging prices that consumers believe are too high, they are practicing:

Which of the following is a formal method for incorporating demand into prices?

Market-based prices are influenced by all of the following except:

Kaizen costing is a technique aimed at improvement of short-term profitability.

Which pricing method is used to capture market share by charging low introductory prices?

More profitable customers are more likely to:

Managers determine what a customer is willing to pay for a product or service under which one of these pricing method?

Compare and contrast target costing with kaizen costing.

Not-for-profit organisations price products in the same manner as for-profit organisations.

The price does not need to cover costs for what kinds of organisations?

Target costing is a technique to improve long-term profitability by considering product costs at the design phase.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters