Question 1

Establishing prices so low that competitors are driven out of a market

Accepted Answer

The answer of Establishing prices so low that competitors are...

Question 2

Arizona Company provided the following information regarding its only product--skateboards. $\begin{array}{lr}
\text { Direct materials used } & \$ 350,000 \
\text { Direct labor } & 170,000 \
\text { Fixed overhead } & 80,000 \
\text { Variable overhead } & 20,000 \
\text { Variable selling and administrative } & 90,000 \\
\text { Units produced and sold } & 40,000
\end{array}$ The difference in manufacturing cost per unit, if the absorption approach is used in place of the contribution approach, is _____.

Accepted Answer

A) cost per unit increases by $2 
B) cost per unit decreases by $2 
C) cost per unit increases by $0.75 
D) cost per unit decreases by $0.75 
A) cost per unit increases by $2 
B) cost per unit decreases by $2 
C) cost per unit increases by $0.75 
D) cost per unit decreases by $0.75

Question 3

_____ is the process of putting a decision into action.

Accepted Answer

A) Prediction 
B) Feedback 
C) Implementation 
D) Evaluation of performance 
A) Prediction 
B) Feedback 
C) Implementation 
D) Evaluation of performance

Question 4

Marginal cost is _____.

Accepted Answer

A) total cost divided by contribution margin 
B) the cost per unit used to compute the contribution margin 
C) the additional cost resulting from producing and selling one additional unit 
D) the resulting additional cost 
A) total cost divided by contribution margin 
B) the cost per unit used to compute the contribution margin 
C) the additional cost resulting from producing and selling one additional unit 
D) the resulting additional cost

Question 5

If perfectly accurate and relevant information is not available for decision making, the accountant should consider using information that is _____.

Accepted Answer

A) precise but irrelevant 
B) imprecise but irrelevant 
C) imprecise but relevant 
D) all of these answers are correct 
A) precise but irrelevant 
B) imprecise but irrelevant 
C) imprecise but relevant 
D) all of these answers are correct

Question 6

Historical data might have a direct bearing on a decision.

Accepted Answer

A) True 
 B)False

Question 7

In perfect competition, all competing firms sell similar products at similar prices.

Accepted Answer

A) True 
 B)False

Question 8

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 units.There is sufficient capacity available for the order._____ is relevant for this decision.

Accepted Answer

A) The parts for the order 
B) The supervisor's salary 
C) The depreciation on assembly equipment 
D) All of these answers are correct 
A) The parts for the order 
B) The supervisor's salary 
C) The depreciation on assembly equipment 
D) All of these answers are correct

Question 9

Rainbow Manufacturing is considering producing a new product.Rainbow Manufacturing expects to sell 2,000 units over the product's expected 5-year life.Variable production costs and variable selling costs are estimated at $42 and $16 per unit, respectively.Annual fixed production and fixed selling costs are estimated at $15,000 and $5,000, respectively._____ is the total fixed cost over the product life cycle.

Accepted Answer

A) $20,000 
B) $100,000 
C) $116,000 
D) $464,000 
A) $20,000 
B) $100,000 
C) $116,000 
D) $464,000

Question 10

Pennsylvania Company provided the following information regarding its only product--skateboards. $$\begin{array} { l r } 
\text { Direct materials used } & \$ 200,000 \
\text { Direct labor } & 80,000 \
\text { Fixed overhead } & 100,000 \
\text { Fixed selling and administrative costs } & 190,000 \
\text { Variable overhead } & 20,000 \
\text { Variable selling and administrative } & 90,000 \
\text { Selling unit price } & 70 \\
\text { Units produced and sold } &10,000 \
\end{array}$$ _____ is the gross margin if the absorption approach is used.

Accepted Answer

A) $300,000 
B) $390,000 
C) $470,000 
D) $450,000 
A) $300,000 
B) $390,000 
C) $470,000 
D) $450,000

Question 11

Bombay Industries budgeted the following costs for the production of its only product, tennis balls, for the next fiscal year: $$\begin{array} { l r } 
\text { Materials } & \$ 35,000 \
\text { Labor } & 25,000 \
\text { Overhead: } & \
\text { Variable } & 30,000 \
\text { Fixed } & 15,000 \
\text { Selling and administrative: } & \
\text { Variable } & 7,500 \
\text { Fixed } & \underline { 12,500 } \
\text { Total costs } & \$ 125,000
\end{array}$$ Bombay Industries has a target profit of $40,000.The average target markup for setting prices as a percentage of total production costs would be _____.

Accepted Answer

A) 158% 
B) 32% 
C) 68% 
D) 57% 
A) 158% 
B) 32% 
C) 68% 
D) 57%

Question 12

The profit-maximizing volume is the quantity at which the difference between the sales price and marginal cost is at its greatest.

Accepted Answer

A) True 
 B)False

Question 13

A tool for making cost a key focus throughout the life of a product

Accepted Answer

The answer of A tool for making cost a key...

Question 14

A market in which the price a firm charges for a unit will influence the quantity of units it sells

Accepted Answer

Imperfect

Question 15

In determining whether to purchase a labor saving machine, extreme resistance to the machine would be an) _____.

Accepted Answer

A) relevant qualitative factor 
B) relevant quantitative factor 
C) irrelevant qualitative factor 
D) irrelevant quantitative factor 
A) relevant qualitative factor 
B) relevant quantitative factor 
C) irrelevant qualitative factor 
D) irrelevant quantitative factor

Question 16

Bunch Manufacturing is considering producing a new product.Bunch Manufacturing expects to sell 2,000 units over the product's expected 4-year life.Variable production costs and variable selling costs are estimated at $42 and $16 per unit, respectively.Annual fixed production and fixed selling costs are estimated at $15,000 and $5,000, respectively.Research and development costs are estimated at $184,000._____ is the total cost over the product life cycle.

Accepted Answer

A) $116,000 
B) $196,000 
C) $264,000 
D) $380,000 
A) $116,000 
B) $196,000 
C) $264,000 
D) $380,000

Question 17

Kansas Company produces and sells 20,000 units at $22 per unit.Kansas Company's product cost is calculated as follows: $$\begin{array} { l l } 
\text { Variable-unit-based costs } & \$ 10 \text { per unit } \
\text { Fixed costs } & \$ 2 \text { per unit } \
\text { Set-up costs } & \$ 3 \text { per unit } \
& \$ 15 \text { per unit }
\end{array}$$ A total of 500 set-ups at a cost of $120 per set-up are required to produce the 20,000 units.Kansas Company has received a special order to sell 5,000 units at $12 per unit.Kansas Company has excess capacity available, but these 5,000 would require 60 set-ups.If Kansas Company accepts the special order, Kansas Company's cost will increase by _____.

Accepted Answer

A) $7,200 
B) $40,000 
C) $57,200 
D) $65,000 
A) $7,200 
B) $40,000 
C) $57,200 
D) $65,000

Question 18

Information may be relevant for one decision and the same information may be irrelevant for another decision.

Accepted Answer

A) True 
 B)False

Question 19

A one-time-only special order decision _____

Accepted Answer

A) has no role in segregating special and regular customers 
B) must involve unused plant capacity to avoid lost profits on regularly priced items 
C) allows a company to sell products at prices that only cover fixed costs 
D) involves selling products at a percentage over retail price due to the short time period involved 
A) has no role in segregating special and regular customers 
B) must involve unused plant capacity to avoid lost profits on regularly priced items 
C) allows a company to sell products at prices that only cover fixed costs 
D) involves selling products at a percentage over retail price due to the short time period involved

Question 20

The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide an adequate profit margin is referred to as _____.

Accepted Answer

A) full costing 
B) target costing 
C) predatory pricing 
D) discriminatory pricing 
A) full costing 
B) target costing 
C) predatory pricing 
D) discriminatory pricing

Establishing prices so low that competitors are driven out of a market

_____ is the process of putting a decision into action.

Marginal cost is _____.

If perfectly accurate and relevant information is not available for decision making, the accountant should consider using information that is _____.

Historical data might have a direct bearing on a decision.

In perfect competition, all competing firms sell similar products at similar prices.

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 units.There is sufficient capacity available for the order._____ is relevant for this decision.

The profit-maximizing volume is the quantity at which the difference between the sales price and marginal cost is at its greatest.

A tool for making cost a key focus throughout the life of a product

A market in which the price a firm charges for a unit will influence the quantity of units it sells

In determining whether to purchase a labor saving machine, extreme resistance to the machine would be an) _____.

Information may be relevant for one decision and the same information may be irrelevant for another decision.

A one-time-only special order decision _____

The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide an adequate profit margin is referred to as _____.

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 5: Relevant Information and Decision Making With a Focus on Pricing Decisions

Establishing prices so low that competitors are driven out of a market

_____ is the process of putting a decision into action.

Marginal cost is _____.

If perfectly accurate and relevant information is not available for decision making, the accountant should consider using information that is _____.

Historical data might have a direct bearing on a decision.

In perfect competition, all competing firms sell similar products at similar prices.

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 units.There is sufficient capacity available for the order._____ is relevant for this decision.

The profit-maximizing volume is the quantity at which the difference between the sales price and marginal cost is at its greatest.

A tool for making cost a key focus throughout the life of a product

A market in which the price a firm charges for a unit will influence the quantity of units it sells

In determining whether to purchase a labor saving machine, extreme resistance to the machine would be an) _____.

Information may be relevant for one decision and the same information may be irrelevant for another decision.

A one-time-only special order decision _____

The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide an adequate profit margin is referred to as _____.

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters