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?

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

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

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

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 material loading charge to be used next year assuming a 40% markup on material cost is

A) 20%. B) 40%. C) 65%. D) 80%. A) 20%. B) 40%. C) 65%. D) 80%.

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

A) $351. B) $243. C) $162. D) $371. A) $351. B) $243. C) $162. D) $371.

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: $\begin{array}{ll} \text { Variable costs } & \$ 250,000 \\ \text { Fixed costs } & \$ 450,000 \\ \text { Rol } & 14 \% \\ \text { Investment } & \$ 2,000,000 \\ \text { Sales } & 200,000 \text { units } \end{array}$ -What is the markup percentage?

A) 112% B) 20% C) 62% D) 40% A) 112% B) 20% C) 62% D) 40%

Well Water Inc. wants to produce and sell a new flavored water. In order to penetrate the market, the product will have to sell at $2.00 per 12 oz. bottle. The following data has been collected: \[\begin{array} { l c } \text { Annual sales } & 50,000 \text { bottles } \\ \text { Projected selling and administrative costs } & \$ 8,000 \\ \text { Desired profit } & \$ 70,000 \end{array}\] The target cost per bottle is

A) $0.44. B) $0.60. C) $0.16. D) $0.40. A) $0.44. B) $0.60. C) $0.16. D) $0.40.

Exam 8: Pricing

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: Total bill \ 600 Labor profit margin \ 10 Materials profit margin 20\% Total labor charges \ 390 Cost of materials used \ 120 Total hourly cost \ 22.50 -How many hours were billed on the job?

(Multiple Choice)

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Question 121

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

(True/False)

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Question 122

The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the

(Multiple Choice)

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Question 123

The first step in the absorption-cost approach is to compute the markup percentage used in setting the target selling price.

(True/False)

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Question 124

Use the following information for questions Papillon Co. has determined the following per unit amounts: Direct materials \ 30 Fixed selling and administrative \ 60 Direct labor 36 Variable overhead 24 Desired ROI 33 Variable selling and administrative 15 Fixed overhead 45 -The cost base using the absorption-cost approach is

(Multiple Choice)

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Question 125

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

(Multiple Choice)

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Question 126

Use the following information for questions . Jaycee Auto Repair has the following budgeted costs for the next year: Time Charges Material Charges Shop employees' wages and benefits \ 120,000 \ Parts manager's salary and benefits - 45,000 Office employee's salary and benefits 30,000 15,000 Other overhead 15,000 40,000 Invoice cost of parts and materials - 400,000 Total budgeted costs \1 65,000 \5 00,000 -The material loading charge to be used next year assuming a 40% markup on material cost is

(Multiple Choice)

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Question 127

Which of the following is consistent with generally accepted accounting principles?

(Multiple Choice)

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Question 128

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?

(Multiple Choice)

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Question 129

Use the following information for questions Papillon Co. has determined the following per unit amounts: Direct materials \ 30 Fixed selling and administrative \ 60 Direct labor 36 Variable overhead 24 Desired ROI 33 Variable selling and administrative 15 Fixed overhead 45 -The target selling price using the absorption-cost approach is

(Multiple Choice)

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Question 130

All of the following are correct statements about the market-based approach except that it

(Multiple Choice)

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Question 131

The price used to record a sale between divisions within the same vertically integrated company is called the

(Multiple Choice)

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Question 132

Use the following information for questions Management of the Catering Company would like the Food Division to transfer 10,000 cans of its final product to the Restaurant Division for $30. The Food Division sells the product to customers for $70 per unit. The Food Division's variable cost per unit is $35 and its fixed cost per unit is $10. -If the Food Division is currently operating at full capacity, what is the minimum transfer price the Food Division should accept?

(Multiple Choice)

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Question 133

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

(True/False)

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Question 134

The markup percentage denominator in the variable-cost approach is the

(Multiple Choice)

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Question 135

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: Variable costs \ 250,000 Fixed costs \ 450,000 Rol 14\% Investment \ 2,000,000 Sales 200,000 units -What is the markup percentage?

(Multiple Choice)

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(87)

Question 136

Well Water Inc. wants to produce and sell a new flavored water. In order to penetrate the market, the product will have to sell at $2.00 per 12 oz. bottle. The following data has been collected: Annual sales 50,000 bottles Projected selling and administrative costs \ 8,000 Desired profit \ 70,000 The target cost per bottle is

(Multiple Choice)

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(71)

Question 137

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

The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the

The first step in the absorption-cost approach is to compute the markup percentage used in setting the target selling price.

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

Which of the following is consistent with generally accepted accounting principles?

All of the following are correct statements about the market-based approach except that it

The price used to record a sale between divisions within the same vertically integrated company is called the

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

The markup percentage denominator in the variable-cost approach is the

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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