Question 1

Which type of expenses does a monopoly usually incur that are different from the other types of market structures?

Accepted Answer

A) marketing costs such as advertising, positioning, discounting, and coupons 
B) costs of differentiation such as advertising, rebates, coupons 
C) no special expenses 
D) legal and lobbying expenditures 
A) marketing costs such as advertising, positioning, discounting, and coupons 
B) costs of differentiation such as advertising, rebates, coupons 
C) no special expenses 
D) legal and lobbying expenditures

Question 2

Goods that are price elastic have few substitutes while those that are inelastic have many substitutes.

Accepted Answer

A) True 
 B)False

Question 3

The budgeted average unit contribution margin is the budgeted total contribution margin divided by the:

Accepted Answer

A) budgeted total units 
B) budgeted total price 
C) budgeted fixed expenses 
D) budgeted variable expenses 
A) budgeted total units 
B) budgeted total price 
C) budgeted fixed expenses 
D) budgeted variable expenses

Question 4

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2018, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit.
What is Franklin's total sales variance?

Accepted Answer

A) $8,000 (U) 
B) $20,000 (U) 
C) $18,000 (F) 
D) $2,000 (U) 
A) $8,000 (U) 
B) $20,000 (U) 
C) $18,000 (F) 
D) $2,000 (U)

Question 5

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Accepted Answer

A) equal. 
B) less. 
C) greater. 
D) twice as much. 
A) equal. 
B) less. 
C) greater. 
D) twice as much.

Question 6

The Crested Butte Company recorded the following data for a product line: $$\begin{array} { l r } 
\text { Sales } & \$ 250,000 \
\text { Variable manufacturing expenses } & 50,000 \
\text { Direct fixed manufacturing expenses } & 37,500 \
\text { Variable selling and administrative expenses } & 25,000 \
\text { Direct fixed selling and admin. expenses } & 30,000
\end{array}$$
What is the segment margin of the product line?

Accepted Answer

A) $107,500 
B) $162,500 
C) $75,000 
D) $175,000 
A) $107,500 
B) $162,500 
C) $75,000 
D) $175,000

Question 7

Compare and contrast the various pricing policies used by companies.

Accepted Answer

Cost is an important determinant of supp

Question 8

The product life cycle describes the profit history of a product according to its introduction, growth, maturity, and decline stages.

Accepted Answer

A) True 
 B)False

Question 9

Oligopoly is a market structure:

Accepted Answer

A) that has many buyers and sellers, a homogeneous product, and allows easy entry into and exit from the industry. 
B) in which barriers to entry are so high that there is only one firm in the market. 
C) in which there are a few sellers and the barriers to entry are usually cost related. 
D) that has characteristics of both monopoly and perfect competition and is much closer to the competitive situation. 
A) that has many buyers and sellers, a homogeneous product, and allows easy entry into and exit from the industry. 
B) in which barriers to entry are so high that there is only one firm in the market. 
C) in which there are a few sellers and the barriers to entry are usually cost related. 
D) that has characteristics of both monopoly and perfect competition and is much closer to the competitive situation.

Question 10

Division B earns a contribution margin of $200,000 and has a divisional margin of $70,000. If Division B is closed, all of the direct divisional expenses and $110,000 of common expenses can be eliminated. These facts indicate that closing the division will cause the firm's operating income to

Accepted Answer

A) increase by $90,000. 
B) decrease by $90,000. 
C) increase by $40,000. 
D) decrease by $40,000. 
A) increase by $90,000. 
B) decrease by $90,000. 
C) increase by $40,000. 
D) decrease by $40,000.

Question 11

The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Bayview sold 1,000,000 cases last year to the following types of customers: $$\begin{array} { | l | c | c | } 
\hline \text { USTOMER } & \text { PRICE PER CASE } & \text { CASES SOLD } \
\hline \text { Drugstore chains } & \$ 5.00 & 375,000 \
\hline \text { Gas station chains } & \$ 5.50 & 125,000 \
\hline \text { Supermarket chains } & \$ 6.50 & 500,000 \
\hline \text { Local pharmacies } & \$ 6.00 & 250,000 \
\hline
\end{array}$$
The drugstore chains have special handling costs of $0.20 a case and increased administrative assistance costing $45,000 per year.
The gas station chains require special marketing promotions that cost $50,000. Sales commissions of 10% are paid.
The supermarket chains order electronically through EDI which costs $25,000 annually. Bayview is responsible for shipping costs, which totaled $0.50 a case and special labels costing $0.02 per bottle
Local pharmacies have special handling costs of $0.10 per case and sales commissions are paid to agents costing $0.25 per case. Bad debt expense averages 10% of sales.
What is the total cost per case for drugstore chains?

Accepted Answer

A) $2.12 per case 
B) $2.32 per case 
C) $2.20 per case 
D) $2.45 per case 
A) $2.12 per case 
B) $2.32 per case 
C) $2.20 per case 
D) $2.45 per case

Question 12

Cost-based pricing involves the calculated product cost plus the desired profit.

Accepted Answer

A) True 
 B)False

Question 13

The overall sales variance is the sum of the contribution margin and the sales price variance.

Accepted Answer

A) True 
 B)False

Question 14

The following information pertains to Cumberland Corporation: $$\begin{array} { l r } 
\text { Beginning inventory } & 0 \text { units } \
\text { Ending inventory } & 6,000 \text { units } \
\text { Direct labor per unit } & \$ 20 \
\text { Direct materials per unit } & 16 \
\text { Variable overhead per unit } & 4 \
\text { Fixed overhead per unit } & 10 \
\text { Variable selling costs per unit } & 12 \
\text { Fixed selling costs per unit } & 16
\end{array}$$ What is the value of ending inventory using the absorption costing method?

Accepted Answer

A) $410,000 
B) $300,000 
C) $600,000 
D) $216,000 
A) $410,000 
B) $300,000 
C) $600,000 
D) $216,000

Question 15

The market share and market size variances allow firms to compare their performance with the:

Accepted Answer

A) market as a whole 
B) previous year's results 
C) upcoming year's projections 
D) inner workings of the company 
A) market as a whole 
B) previous year's results 
C) upcoming year's projections 
D) inner workings of the company

Question 16

Scottish Company manufactures a variety of toys and games. John Chisholm, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in 2018 when 30,000 were projected. Sales for 2019 look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed.
Which option is preferred?

Accepted Answer

A) Options One and Three are equally preferred. 
B) Option Three 
C) Option Two 
D) Option One 
A) Options One and Three are equally preferred. 
B) Option Three 
C) Option Two 
D) Option One

Question 17

Many companies base prices on cost while other companies use target-costing strategies.

Accepted Answer

A) True 
 B)False

Question 18

Normandy Company has the following information pertaining to its two divisions for 2018: $$\begin{array} { l r r } 
& \text { Division } \mathrm { X } & \text { Division } Y \
\text { Variable selling and admin. expenses } & \$ 70,000 & \$ 90,000 \
\text { Direct fixed manufacturing expenses } & 35,000 & 100,000 \
\text { Sales } & 200,000 & 400,000 \
\text { Direct fixed selling and admin. expenses } & 30,000 & 70,000 \
\text { Variable manufacturing expenses } & 40,000 & 100,000
\end{array}$$ Common expenses are $24,000 for 2018. What is the operating income for Normandy Company?

Accepted Answer

A) $65,000 
B) $325,000 
C) $41,000 
D) $300,000 
A) $65,000 
B) $325,000 
C) $41,000 
D) $300,000

Question 19

One limitation to profitability analysis is its focus on __________ performance.

Accepted Answer

The answer of One limitation to profitability analysis is its...

Question 20

The sales mix variance tells managers what impact a difference between actual and expected percentages of products sold has on:

Accepted Answer

A) volume variance 
B) sales variance 
C) contribution margin 
D) market share 
A) volume variance 
B) sales variance 
C) contribution margin 
D) market share

Which type of expenses does a monopoly usually incur that are different from the other types of market structures?

Goods that are price elastic have few substitutes while those that are inelastic have many substitutes.

The budgeted average unit contribution margin is the budgeted total contribution margin divided by the:

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2018, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's total sales variance?

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Compare and contrast the various pricing policies used by companies.

The product life cycle describes the profit history of a product according to its introduction, growth, maturity, and decline stages.

Oligopoly is a market structure:

Division B earns a contribution margin of $200,000 and has a divisional margin of $70,000. If Division B is closed, all of the direct divisional expenses and $110,000 of common expenses can be eliminated. These facts indicate that closing the division will cause the firm's operating income to

Cost-based pricing involves the calculated product cost plus the desired profit.

The overall sales variance is the sum of the contribution margin and the sales price variance.

The market share and market size variances allow firms to compare their performance with the:

Many companies base prices on cost while other companies use target-costing strategies.

One limitation to profitability analysis is its focus on __________ performance.

The sales mix variance tells managers what impact a difference between actual and expected percentages of products sold has on:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 18: Pricing and Profitability Analysis

Which type of expenses does a monopoly usually incur that are different from the other types of market structures?

Goods that are price elastic have few substitutes while those that are inelastic have many substitutes.

The budgeted average unit contribution margin is the budgeted total contribution margin divided by the:

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2018, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's total sales variance?

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Compare and contrast the various pricing policies used by companies.

The product life cycle describes the profit history of a product according to its introduction, growth, maturity, and decline stages.

Oligopoly is a market structure:

Division B earns a contribution margin of $200,000 and has a divisional margin of $70,000. If Division B is closed, all of the direct divisional expenses and $110,000 of common expenses can be eliminated. These facts indicate that closing the division will cause the firm's operating income to

Cost-based pricing involves the calculated product cost plus the desired profit.

The overall sales variance is the sum of the contribution margin and the sales price variance.

The market share and market size variances allow firms to compare their performance with the:

Many companies base prices on cost while other companies use target-costing strategies.

One limitation to profitability analysis is its focus on __________ performance.

The sales mix variance tells managers what impact a difference between actual and expected percentages of products sold has on:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters