Question 1

Under the absorption-cost approach, all of the following are included in the cost base except

Accepted Answer

A) direct materials. 
B) fixed manufacturing overhead. 
C) selling and administrative costs. 
D) variable manufacturing overhead. 
A) direct materials. 
B) fixed manufacturing overhead. 
C) selling and administrative costs. 
D) variable manufacturing overhead.

Question 2

Use the following information for questions 
Brislin Products has a new product going on the market next year. The following data are projections for production and sales: $$\begin{array} { l l } 
\text { Variable costs } & \$ 250,000 \
\text { Fixed costs } & \$ 450,000 \
\text { ROl } & 14 \% \
\text { Investment } & \$ 2,000,000 \
\text { Sales } & 200,000 \text { units }
\end{array}$$
-What would the markup percentage be if only 150,000 units were sold and Brislin still wanted to earn the desired ROI?

Accepted Answer

A) 32.95% 
B) 53.33% 
C) 35.0% 
D) 44.00% 
A) 32.95% 
B) 53.33% 
C) 35.0% 
D) 44.00%

Question 3

Use the following information for questions 
The Selling Division's unit sales price is $25 and its unit variable cost is $15. Its capacity is 10,000 units. Fixed costs per unit are $6. Current outside sales are 8,000 units.
-What is the Selling Division's opportunity cost per unit from selling 2,000 units to the Purchasing Division?

Accepted Answer

A) $10 
B) $25 
C) $4 
D) $0 
A) $10 
B) $25 
C) $4 
D) $0

Question 4

Maggie Co.has variable manufacturing costs per unit of $20, and fixed manufacturing cost per unit is $10.Variable selling and administrative costs per unit are $5, while fixed selling and administrative costs per unit are $2.Maggie desires an ROI of $8 per unit.If Maggie Co.uses the variable-cost approach, what is its markup percentage?

Accepted Answer

A) 30% 
B) 50% 
C) 80% 
D) 100% 
A) 30% 
B) 50% 
C) 80% 
D) 100%

Question 5

In January 2016, Wheels 'N Spokes repairs a bicycle that uses parts of $180.Its material loading charge on this repair would be

Accepted Answer

A) $72. 
B) $108. 
C) $180. 
D) $252. 
A) $72. 
B) $108. 
C) $180. 
D) $252.

Question 6

Use the following information for questions 
The Selling Division's unit sales price is $25 and its unit variable cost is $15. Its capacity is 10,000 units. Fixed costs per unit are $6. Current outside sales are 8,000 units.
-What is the Selling Division's opportunity cost per unit from selling 3,000 units to the Purchasing Division?

Accepted Answer

A) $10 
B) $25 
C) $4 
D) $0 
A) $10 
B) $25 
C) $4 
D) $0

Question 7

Target cost is comprised of

Accepted Answer

A) variable and fixed manufacturing costs only. 
B) variable manufacturing and selling and administrative costs only. 
C) total manufacturing and selling and administrative costs. 
D) fixed manufacturing and selling and administrative costs only. 
A) variable and fixed manufacturing costs only. 
B) variable manufacturing and selling and administrative costs only. 
C) total manufacturing and selling and administrative costs. 
D) fixed manufacturing and selling and administrative costs only.

Question 8

All of the following are correct statements about the cost-plus pricing approach except that it

Accepted Answer

A) is simple to compute. 
B) considers customer demand. 
C) includes only variable costs in the cost base. 
D) will only work when the company sells the quantity it budgeted. 
A) is simple to compute. 
B) considers customer demand. 
C) includes only variable costs in the cost base. 
D) will only work when the company sells the quantity it budgeted.

Question 9

In time-and-material pricing, the charge for a particular job is the sum of the labor charge and the

Accepted Answer

A) materials charge. 
B) material loading charge. 
C) materials charge + desired profit. 
D) materials charge + the material loading charge. 
A) materials charge. 
B) material loading charge. 
C) materials charge + desired profit. 
D) materials charge + the material loading charge.

Question 10

All of the following are correct statements about the cost-based transfer price approach except that it

Accepted Answer

A) can understate the actual contribution to profit by the selling division. 
B) can reduce a division manager's control over the division's performance. 
C) bases the transfer price on standard cost instead of actual cost. 
D) provides incentive for the selling division to control costs. 
A) can understate the actual contribution to profit by the selling division. 
B) can reduce a division manager's control over the division's performance. 
C) bases the transfer price on standard cost instead of actual cost. 
D) provides incentive for the selling division to control costs.

Question 11

Factors that can affect pricing decisions include all of the following except

Accepted Answer

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

Question 12

Bryson Company has just developed a new product.The following data is available for this product: $\begin{array}{lr}
\text { Desired ROl per unit } & \$ 30 \
\text { Fixed cost per unit } & 50 \
\text { Variable cost per unit } & 75 \
\text { Total cost per unit } & 125
\end{array}$ The target selling price for this product is

Accepted Answer

A) $155. 
B) $125. 
C) $105. 
D) $80. 
A) $155. 
B) $125. 
C) $105. 
D) $80.

Question 13

A problem with a cost-based transfer price is that it does not provide adequate incentive for the selling division to control costs.

Accepted Answer

A) True 
 B)False

Question 14

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 current outside sales are 130,000 board feet, what is the minimum transfer price that the Lumber Division could accept?

Accepted Answer

A) $1.25 
B) $1.40 
C) $1.75 
D) $2.50 
A) $1.25 
B) $1.40 
C) $1.75 
D) $2.50

Question 15

In time-and-material pricing, a material loading charge covers all of the following except

Accepted Answer

A) purchasing costs. 
B) related overhead. 
C) desired profit margin. 
D) All of these are covered. 
A) purchasing costs. 
B) related overhead. 
C) desired profit margin. 
D) All of these are covered.

Question 16

Use the following information for questions 
Lonely Guy Repair Service recently performed repair services for a customer that totaled $400. Somehow the bill was lost and the company accountant was trying to recreate the bill from memory. This is what was remembered: $$\begin{array} { l l } 
\text { Total bill } & \$ 600 \
\text { Labor profit margin } & \$ 10 \
\text { Materials profit margin } & 20 \% \
\text { Total labor charges } & \$ 390 \
\text { Cost of materials used } & \$ 120 \
\text { Total hourly cost } & \$ 22.50
\end{array}$$
-How many hours were billed on the job?

Accepted Answer

A) 19.5 
B) 18.5 
C) 17.3 
D) 12.0 
A) 19.5 
B) 18.5 
C) 17.3 
D) 12.0

Question 17

The absorption-cost approach is consistent with generally accepted accounting principles because it defines the cost base as the manufacturing cost.

Accepted Answer

A) True 
 B)False

Question 18

The cost-plus pricing approach's major advantage is

Accepted Answer

A) it considers customer demand. 
B) that sales volume has no effect on per unit costs. 
C) it is simple to compute. 
D) it can be used to determine a product's target cost. 
A) it considers customer demand. 
B) that sales volume has no effect on per unit costs. 
C) it is simple to compute. 
D) it can be used to determine a product's target cost.

Question 19

Use the following information for questions 
Tuttle Motorcycles Inc. manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 20,000 units to the Production Division at $1,050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2,550 and unit variable costs and fixed costs of $1,050 and $750, respectively. The Production Division is currently paying $2,400 per unit to an outside supplier. $90 per unit can be saved on internal sales from reduced selling expenses.
-What is the increase/decrease in overall company profits if this transfer takes place?

Accepted Answer

A) Decrease $1,200,000 
B) Increase $2,520,000 
C) Decrease $3,000,000 
D) Increase $27,000,000 
A) Decrease $1,200,000 
B) Increase $2,520,000 
C) Decrease $3,000,000 
D) Increase $27,000,000

Question 20

In which of the following situations would a company not set the prices of its products?

Accepted Answer

A) When the product is not easily differentiated from competing products 
B) When the product is specially made for a customer 
C) When there are few or no other producers capable of making a similar product 
D) When the product can be effectively differentiated from others 
A) When the product is not easily differentiated from competing products 
B) When the product is specially made for a customer 
C) When there are few or no other producers capable of making a similar product 
D) When the product can be effectively differentiated from others

Under the absorption-cost approach, all of the following are included in the cost base except

In January 2016, Wheels 'N Spokes repairs a bicycle that uses parts of $180.Its material loading charge on this repair would be

Target cost is comprised of

All of the following are correct statements about the cost-plus pricing approach except that it

In time-and-material pricing, the charge for a particular job is the sum of the labor charge and the

All of the following are correct statements about the cost-based transfer price approach except that it

Factors that can affect pricing decisions include all of the following except

Bryson Company has just developed a new product.The following data is available for this product: Desired ROl per unit \ 30 Fixed cost per unit 50 Variable cost per unit 75 Total cost per unit 125 The target selling price for this product is

A problem with a cost-based transfer price is that it does not provide adequate incentive for the selling division to control costs.

In time-and-material pricing, a material loading charge covers all of the following except

The absorption-cost approach is consistent with generally accepted accounting principles because it defines the cost base as the manufacturing cost.

The cost-plus pricing approach's major advantage is

In which of the following situations would a company not set the prices of its products?

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

Under the absorption-cost approach, all of the following are included in the cost base except

In January 2016, Wheels 'N Spokes repairs a bicycle that uses parts of $180.Its material loading charge on this repair would be

Target cost is comprised of

All of the following are correct statements about the cost-plus pricing approach except that it

In time-and-material pricing, the charge for a particular job is the sum of the labor charge and the

All of the following are correct statements about the cost-based transfer price approach except that it

Factors that can affect pricing decisions include all of the following except

Bryson Company has just developed a new product.The following data is available for this product: Desired ROl per unit \ 30 Fixed cost per unit 50 Variable cost per unit 75 Total cost per unit 125 The target selling price for this product is

A problem with a cost-based transfer price is that it does not provide adequate incentive for the selling division to control costs.

In time-and-material pricing, a material loading charge covers all of the following except

The absorption-cost approach is consistent with generally accepted accounting principles because it defines the cost base as the manufacturing cost.

The cost-plus pricing approach's major advantage is

In which of the following situations would a company not set the prices of its products?

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