Question 1

In the cost-plus pricing approach, the desired ROI per unit is computed by multiplying the ROI percentage by

Accepted Answer

A)  fixed costs. 
B)  total assets. 
C)  total costs. 
D)  variable costs. 
A)  fixed costs. 
B)  total assets. 
C)  total costs. 
D)  variable costs.

Question 2

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: $\begin{array}{ll}\text { Lumber Division: }\
\text { Capacity } & 200,000 \text { board feet } \
\text { Price per board foot } & \$ 2.50 \
\text { Variable production cost per bd. ft. } & \$ 1.25 \
\text { Variable selling cost per bd. ft. } & \$ 0.50\
\text { Construction Division: }\\text { Board feet needed } & 60,000 \
\text { Outside price paid per bd. ft. } & \$ 2.00
\end{array}$ 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 3

The last step in determining the material loading charge percentage is to

Accepted Answer

A)  estimate annual costs for purchasing, receiving, and storing materials. 
B)  estimate the total cost of parts and materials. 
C)  divide material charges by the total estimated costs of parts and materials. 
D)  add a desired profit margin on the materials themselves. 
A)  estimate annual costs for purchasing, receiving, and storing materials. 
B)  estimate the total cost of parts and materials. 
C)  divide material charges by the total estimated costs of parts and materials. 
D)  add a desired profit margin on the materials themselves.

Question 4

Use the following information for questions .
Jaycee Auto Repair has the following budgeted costs for the next year: $\begin{array}{lcr}&\text { Time Charges}&\text {  Material Charges }\
\text { Shop employees' wages and benefits } & \$ 120,000 & \$ \
\text { Parts manager's salary and benefits } & - & 45,000 \
\text { Office employee's salary and benefits } & 30,000 & 15,000 \
\text { Other overhead } & 15,000 & 40,000 \
\text { Invoice cost of parts and materials } & - & 400,000\
\text { Total budgeted costs }&\$165,000&\$500,000
\end{array}$
-The labor rate to be used next year assuming 7,500 hours of repair time and a profit margin of $25 per labor hour is

Accepted Answer

A)  $22. 
B)  $41. 
C)  $43. 
D)  $47. 
A)  $22. 
B)  $41. 
C)  $43. 
D)  $47.

Question 5

Use the following information for questions
Custom Shoes Co. has gathered the following information concerning one model of shoe: $\begin{array}{ll}
\text { Variable manufacturing costs } & \$ 40,000 \
\text { Variable selling and administrative costs } & \$ 20,000 \
\text { Fixed manufacturing costs } & \$ 160,000 \
\text { Fixed selling and administrative costs } & \$ 120,000 \
\text { Investment } & \$ 1,700,000 \
\text { ROl } & 30 \% \
\text { Planned production and sales } & 5,000 \text { pairs }
\end{array}$
-What is the target selling price per pair of shoes?

Accepted Answer

A)  $142 
B)  $170 
C)  $114 
D)  $158 
A)  $142 
B)  $170 
C)  $114 
D)  $158

Question 6

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 7

Use the following information for questions 
The Wood Division of Fir Products, Inc. manufactures rubber moldings and sells them externally for $55. Its variable cost is $25 per unit, and its fixed cost per unit is $7. Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $32.
-Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is

Accepted Answer

A)  $7. 
B)  $25. 
C)  $32. 
D)  $55. 
A)  $7. 
B)  $25. 
C)  $32. 
D)  $55.

Question 8

In January 2019, 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 9

In the formula for the minimum transfer price, opportunity cost is the __________ of the goods sold externally.

Accepted Answer

A)  variable cost 
B)  total cost 
C)  selling price 
D)  contribution margin 
A)  variable cost 
B)  total cost 
C)  selling price 
D)  contribution margin

Question 10

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: $$\begin{array} { l l } 
\text { Total bill } & \$ 600 \
\text { Labor profit margin } & \$ 10 \
\text { Materials profit margin } & 20 \% \
\text { Total labor charges } & \$ 390 \
\text { Cost of materials used } & \$ 120 \
\text { Total hourly cost } & \$ 22.50
\end{array}$$
-What was the material loading charge?

Accepted Answer

A)  37.5% 
B)  43.8% 
C)  61.3% 
D)  75% 
A)  37.5% 
B)  43.8% 
C)  61.3% 
D)  75%

Question 11

Under the variable-cost approach, the cost base consists of all of the variable costs associated with a product except variable selling and administrative costs.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Wasson Widget Company is contemplating the production and sale of a new widget. Projected sales are $300,000 (or 75,000 units) and desired profit is $36,000. What is the target cost per unit?

Accepted Answer

A)  $4.00 
B)  $3.52 
C)  $4.48 
D)  $4.80 
A)  $4.00 
B)  $3.52 
C)  $4.48 
D)  $4.80

Question 14

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 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

The first step for time-and-material pricing is to calculate the

Accepted Answer

A)  charge for obtaining materials. 
B)  charge for holding materials. 
C)  labor charge per hour. 
D)  charges for a particular job. 
A)  charge for obtaining materials. 
B)  charge for holding materials. 
C)  labor charge per hour. 
D)  charges for a particular job.

Question 17

Using time-and-material pricing involves how many steps?

Accepted Answer

A)  4 
B)  3 
C)  2 
D)  1 
A)  4 
B)  3 
C)  2 
D)  1

Question 18

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 minimum transfer price that the Engine Division should accept?

Accepted Answer

A)  $2,460 
B)  $2,550 
C)  $2,400 
D)  $1,500 
A)  $2,460 
B)  $2,550 
C)  $2,400 
D)  $1,500

Question 19

Use the following information for questions
Custom Shoes Co. has gathered the following information concerning one model of shoe: $\begin{array}{ll}
\text { Variable manufacturing costs } & \$ 40,000 \
\text { Variable selling and administrative costs } & \$ 20,000 \
\text { Fixed manufacturing costs } & \$ 160,000 \
\text { Fixed selling and administrative costs } & \$ 120,000 \
\text { Investment } & \$ 1,700,000 \
\text { ROl } & 30 \% \
\text { Planned production and sales } & 5,000 \text { pairs }
\end{array}$
-What is the markup percentage?

Accepted Answer

A)  150% 
B)  255% 
C)  850% 
D)  182% 
A)  150% 
B)  255% 
C)  850% 
D)  182%

Question 20

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.

In the cost-plus pricing approach, the desired ROI per unit is computed by multiplying the ROI percentage by

The last step in determining the material loading charge percentage is to

Variable costs of units sold internally will always be

In January 2019, Wheels 'N Spokes repairs a bicycle that uses parts of $180. Its material loading charge on this repair would be

In the formula for the minimum transfer price, opportunity cost is the __________ of the goods sold externally.

Under the variable-cost approach, the cost base consists of all of the variable costs associated with a product except variable selling and administrative costs.

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

Wasson Widget Company is contemplating the production and sale of a new widget. Projected sales are $300,000 (or 75,000 units) and desired profit is $36,000. What is the target cost per unit?

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

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.

The first step for time-and-material pricing is to calculate the

Using time-and-material pricing involves how many steps?

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

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 8: Pricing

In the cost-plus pricing approach, the desired ROI per unit is computed by multiplying the ROI percentage by

The last step in determining the material loading charge percentage is to

Variable costs of units sold internally will always be

In January 2019, Wheels 'N Spokes repairs a bicycle that uses parts of $180. Its material loading charge on this repair would be

In the formula for the minimum transfer price, opportunity cost is the __________ of the goods sold externally.

Under the variable-cost approach, the cost base consists of all of the variable costs associated with a product except variable selling and administrative costs.

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

Wasson Widget Company is contemplating the production and sale of a new widget. Projected sales are $300,000 (or 75,000 units) and desired profit is $36,000. What is the target cost per unit?

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

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.

The first step for time-and-material pricing is to calculate the

Using time-and-material pricing involves how many steps?

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

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters