Question 1

In most cases, a company sets the price instead of it being set by the competitive market.

Accepted Answer

A) True 
 B)False

Question 2

Because absorption cost data already exists in general ledger accounts, it is cost effective to use it for pricing.

Accepted Answer

A) True 
 B)False

Question 3

In March 2016, Wheels 'N Spokes repairs a bicycle that takes two hours to repair and uses parts of $240.The bill for this repair would be

Accepted Answer

A) $520. 
B) $560. 
C) $592. 
D) $616. 
A) $520. 
B) $560. 
C) $592. 
D) $616.

Question 4

Variable costs of units sold internally will always be

Accepted Answer

A) lower than the variable costs of units sold externally. 
B) higher than the variable costs of units sold externally. 
C) the same as the variable costs of units sold externally. 
D) Either higher or lower than for units sold externally. 
A) lower than the variable costs of units sold externally. 
B) higher than the variable costs of units sold externally. 
C) the same as the variable costs of units sold externally. 
D) Either higher or lower than for units sold externally.

Question 5

When a cost-based transfer price is used, the transfer price may be based on any of the following except

Accepted Answer

A) fixed cost alone. 
B) full cost. 
C) variable cost alone. 
D) All of these may be used. 
A) fixed cost alone. 
B) full cost. 
C) variable cost alone. 
D) All of these may be used.

Question 6

Companies that sell products whose prices are set by market forces are called

Accepted Answer

A) price givers. 
B) price leaders. 
C) price takers. 
D) price setters. 
A) price givers. 
B) price leaders. 
C) price takers. 
D) price setters.

Question 7

Use the following information for questions 
Carlos Consulting Inc. provides financial consulting and has collected the following data for the next year's budgeted activity for a lead consultant. $$\begin{array} { l l } 
\text { Consultants' wages } & \$ 90,000 \
\text { Fringe benefits } & \$ 22,500 \
\text { Related overhead } & \$ 17,500 \
\text { Supply clerk's wages } & \$ 18,000 \
\text { Fringe benefits } & \$ 4,000 \
\text { Related overhead } & \$ 20,000 \
\text { Profit margin per hour } & \$ 20 \
\text { Profit margin on materials } & 15 \% \
\text { Total estimated consulting hours } & 5,000 \
\text { Total estimated material costs } & \$ 168,000
\end{array}$$
-A consulting job takes 20 hours of consulting time and $180 of materials.The client's bill would be

Accepted Answer

A) $1,172. 
B) $772. 
C) $952. 
D) $1,100. 
A) $1,172. 
B) $772. 
C) $952. 
D) $1,100.

Question 8

When a sale occurs between divisions of the same company, which transfer pricing approach may lead to the buying division overpricing its product?

Accepted Answer

A) Cost based transfer pricing 
B) Market-based transfer pricing 
C) Negotiated transfer pricing 
D) Cost-plus transfer pricing 
A) Cost based transfer pricing 
B) Market-based transfer pricing 
C) Negotiated transfer pricing 
D) Cost-plus transfer pricing

Question 9

Use the following information for questions 
The Lumber Division of Paul Bunyon Homes Inc. produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division:
$\begin{array}{ll}
\text { Capacity } & 200,000 \text { board feet } \
\text { Price per board foot } & \$ 2.50 \
\text { Variable production cost per bd. ft. } & \$ 1.25 \
\text { Variable selling cost per bd. ft. } & \$ 0.50\\text { Construction Division: }\
\text { Board feet needed }&60,000\\text { Outside price paid per bd.ft. }&\$2.00
\end{array}$ If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs.
-If the Lumber Division has sufficient excess capacity to fulfill the Construction Division's needs, what will be the effect on the company's overall contribution margin?

Accepted Answer

A) Decrease by $30,000 
B) Decrease by $24,000 
C) Increase by $36,000 
D) Increase by $33,500 
A) Decrease by $30,000 
B) Decrease by $24,000 
C) Increase by $36,000 
D) Increase by $33,500

Question 10

Use the following information for questions 
Carlos Consulting Inc. provides financial consulting and has collected the following data for the next year's budgeted activity for a lead consultant. $$\begin{array} { l l } 
\text { Consultants' wages } & \$ 90,000 \
\text { Fringe benefits } & \$ 22,500 \
\text { Related overhead } & \$ 17,500 \
\text { Supply clerk's wages } & \$ 18,000 \
\text { Fringe benefits } & \$ 4,000 \
\text { Related overhead } & \$ 20,000 \
\text { Profit margin per hour } & \$ 20 \
\text { Profit margin on materials } & 15 \% \
\text { Total estimated consulting hours } & 5,000 \
\text { Total estimated material costs } & \$ 168,000
\end{array}$$
-The material loading charge is

Accepted Answer

A) 15%. 
B) 25%. 
C) 40%. 
D) 55%. 
A) 15%. 
B) 25%. 
C) 40%. 
D) 55%.

Question 11

Divisions within vertically integrated companies normally sell goods only to other divisions within the same company.

Accepted Answer

A) True 
 B)False

Question 12

A company using cost-plus pricing has an ROI of 24%, total sales of 20,000 units and a desired ROI per unit of $30.What was the amount of investment?

Accepted Answer

A) $144,000 
B) $2,500,000 
C) $456,000 
D) $789,475 
A) $144,000 
B) $2,500,000 
C) $456,000 
D) $789,475

Question 13

The maximum transfer price from the buying division's standpoint is the

Accepted Answer

A) total cost + opportunity cost. 
B) variable cost + opportunity cost. 
C) external purchase price. 
D) external purchase price + opportunity cost. 
A) total cost + opportunity cost. 
B) variable cost + opportunity cost. 
C) external purchase price. 
D) external purchase price + opportunity cost.

Question 14

In the minimum transfer price formula, variable cost is defined as the variable cost of

Accepted Answer

A) all units sold, both internally and externally. 
B) units sold externally. 
C) units not sold. 
D) units sold internally. 
A) all units sold, both internally and externally. 
B) units sold externally. 
C) units not sold. 
D) units sold internally.

Question 15

The markup percentage in the variable-cost approach is computed by dividing the desired ROI/unit plus fixed costs/unit by the variable costs/unit.

Accepted Answer

A) True 
 B)False

Question 16

All of the following are factors that can affect pricing decisions except

Accepted Answer

A) cost considerations. 
B) demand. 
C) environment. 
D) All of these are factors. 
A) cost considerations. 
B) demand. 
C) environment. 
D) All of these are factors.

Question 17

Use the following information for questions 
Papillon Co. has determined the following per unit amounts: $$\begin{array} { l r l r } 
\text { Direct materials } & \$ 30 & \text { Fixed selling and administrative } & \$ 60 \
\text { Direct labor } & 36 & \text { Variable overhead } & 24 \
\text { Desired ROl } & 33 & \text { Variable selling and administrative } & 15 \
\text { Fixed overhead } & 45 & &
\end{array}$$
-The cost base using the variable-cost approach is

Accepted Answer

A) $90. 
B) $105. 
C) $195. 
D) $135. 
A) $90. 
B) $105. 
C) $195. 
D) $135.

Question 18

Use the following information for questions 
Carlos Consulting Inc. provides financial consulting and has collected the following data for the next year's budgeted activity for a lead consultant. $$\begin{array} { l l } 
\text { Consultants' wages } & \$ 90,000 \
\text { Fringe benefits } & \$ 22,500 \
\text { Related overhead } & \$ 17,500 \
\text { Supply clerk's wages } & \$ 18,000 \
\text { Fringe benefits } & \$ 4,000 \
\text { Related overhead } & \$ 20,000 \
\text { Profit margin per hour } & \$ 20 \
\text { Profit margin on materials } & 15 \% \
\text { Total estimated consulting hours } & 5,000 \
\text { Total estimated material costs } & \$ 168,000
\end{array}$$
-The labor rate per hour is

Accepted Answer

A) $42.50. 
B) $26.00. 
C) $41.50. 
D) $46.00. 
A) $42.50. 
B) $26.00. 
C) $41.50. 
D) $46.00.

Question 19

The transfer price approach that will result in the largest contribution margin to the buying division is the

Accepted Answer

A) cost-based approach. 
B) market-based approach. 
C) negotiated price approach. 
D) time-and-material pricing approach. 
A) cost-based approach. 
B) market-based approach. 
C) negotiated price approach. 
D) time-and-material pricing approach.

Question 20

Maggie Co.has variable manufacturing costs per unit of $20, and fixed manufacturing cost per unit is $15.Variable selling and administrative costs per unit are $4, while fixed selling and administrative costs per unit are $6.Maggie desires an ROI of $7.50 per unit.If Maggie Co.uses the absorption-cost approach, what is its markup percentage?

Accepted Answer

A) 8.33% 
B) 16.67% 
C) 25% 
D) 50% 
A) 8.33% 
B) 16.67% 
C) 25% 
D) 50%

In most cases, a company sets the price instead of it being set by the competitive market.

Because absorption cost data already exists in general ledger accounts, it is cost effective to use it for pricing.

In March 2016, Wheels 'N Spokes repairs a bicycle that takes two hours to repair and uses parts of $240.The bill for this repair would be

Variable costs of units sold internally will always be

When a cost-based transfer price is used, the transfer price may be based on any of the following except

Companies that sell products whose prices are set by market forces are called

When a sale occurs between divisions of the same company, which transfer pricing approach may lead to the buying division overpricing its product?

Divisions within vertically integrated companies normally sell goods only to other divisions within the same company.

A company using cost-plus pricing has an ROI of 24%, total sales of 20,000 units and a desired ROI per unit of $30.What was the amount of investment?

The maximum transfer price from the buying division's standpoint is the

In the minimum transfer price formula, variable cost is defined as the variable cost of

The markup percentage in the variable-cost approach is computed by dividing the desired ROI/unit plus fixed costs/unit by the variable costs/unit.

All of the following are factors that can affect pricing decisions except

The transfer price approach that will result in the largest contribution margin to the buying division is the

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters

Exam 8: Reporting and Analyzing Receivables

In most cases, a company sets the price instead of it being set by the competitive market.

Because absorption cost data already exists in general ledger accounts, it is cost effective to use it for pricing.

In March 2016, Wheels 'N Spokes repairs a bicycle that takes two hours to repair and uses parts of $240.The bill for this repair would be

Variable costs of units sold internally will always be

When a cost-based transfer price is used, the transfer price may be based on any of the following except

Companies that sell products whose prices are set by market forces are called

When a sale occurs between divisions of the same company, which transfer pricing approach may lead to the buying division overpricing its product?

Divisions within vertically integrated companies normally sell goods only to other divisions within the same company.

A company using cost-plus pricing has an ROI of 24%, total sales of 20,000 units and a desired ROI per unit of $30.What was the amount of investment?

The maximum transfer price from the buying division's standpoint is the

In the minimum transfer price formula, variable cost is defined as the variable cost of

The markup percentage in the variable-cost approach is computed by dividing the desired ROI/unit plus fixed costs/unit by the variable costs/unit.

All of the following are factors that can affect pricing decisions except

The transfer price approach that will result in the largest contribution margin to the buying division is the

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters