Question 1

Most of a product's life-cycle costs are locked in by decisions made during the ________ business function of the value chain.

Accepted Answer

A) design 
B) manufacturing 
C) customer-service 
D) marketing 
A) design 
B) manufacturing 
C) customer-service 
D) marketing

Question 2

Fluctuations in exchange rates between different currencies can influence the:

Accepted Answer

A) cost of products using foreign suppliers 
B) pricing of alternative products offered by foreign competitors 
C) demand for products of foreign competitors 
D) All of these answers are correct. 
A) cost of products using foreign suppliers 
B) pricing of alternative products offered by foreign competitors 
C) demand for products of foreign competitors 
D) All of these answers are correct.

Question 3

Life-cycle costing tracks and accumulates business function costs across the entire value chain from a product's initial R&D to its final customer service and support.

Accepted Answer

A) True 
 B)False

Question 4

For most products, the majority of costs are incurred during the ________ business function of the value chain.

Accepted Answer

A) design 
B) manufacturing 
C) customer-service 
D) marketing 
A) design 
B) manufacturing 
C) customer-service 
D) marketing

Question 5

Answer the following questions using the information below:
Block Island TV currently sells large televisions for $360. It has costs of $280. A competitor is bringing a new large television to market that will sell for $300. Management believes it must lower the price to $300 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Block Island TV sales are currently 100,000 televisions per year.
-What is the target cost if the company wants to maintain its same income level, and marketing is correct (rounded to the nearest cent)?

Accepted Answer

A) $225.00 
B) $227.27 
C) $246.68 
D) $280.00 
A) $225.00 
B) $227.27 
C) $246.68 
D) $280.00

Question 6

Direct material costs are locked in when they are:

Accepted Answer

A) designed 
B) assembled 
C) sold 
D) delivered 
A) designed 
B) assembled 
C) sold 
D) delivered

Question 7

Whether the firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces must be considered.

Accepted Answer

A) True 
 B)False

Question 8

Answer the following questions using the information below:
Delgreco Products manufactures high-tech cell phones. Delgreco Products has a policy of adding a 30% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month:
    
-For long-run pricing of the cell phones, what price will MOST likely be used by Delgreco?

Accepted Answer

A) $180.00 
B) $92.50 
C) $65.00 
D) $234.00 
A) $180.00 
B) $92.50 
C) $65.00 
D) $234.00

Question 9

Relevant costs for target pricing are:

Accepted Answer

A) variable manufacturing costs 
B) variable manufacturing and variable nonmanufacturing costs 
C) all fixed costs 
D) all future costs, both variable and fixed 
A) variable manufacturing costs 
B) variable manufacturing and variable nonmanufacturing costs 
C) all fixed costs 
D) all future costs, both variable and fixed

Question 10

All of the following are associated with target costing EXCEPT:

Accepted Answer

A) value engineering 
B) the markup component 
C) all value-chain business functions 
D) cross-functional teams 
A) value engineering 
B) the markup component 
C) all value-chain business functions 
D) cross-functional teams

Question 11

When demand is elastic, an increase in price will lead to an increase in profits.

Accepted Answer

A) True 
 B)False

Question 12

For manufacturing firms, product costs are generally locked in during the manufacturing stage.

Accepted Answer

A) True 
 B)False

Question 13

Answer the following questions using the information below:
Frank's Computer Monitors, Inc., currently sells 17" monitors for $270. It has costs of $210. A competitor is bringing a new 17" monitor to market that will sell for $225. Management believes it must lower the price to $225 to compete in the market for 17" monitors. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Frank's sales are currently 10,000 monitors per year.
-What is the change in operating income if marketing is correct and only the sales price is changed?

Accepted Answer

A) $165,000 
B) $45,000 
C) $(165,000) 
D) $(435,000) 
A) $165,000 
B) $45,000 
C) $(165,000) 
D) $(435,000)

Question 14

Answer the following questions using the information below:
Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division.
  
-Price discrimination is the practice of:

Accepted Answer

A) setting different prices for different products 
B) charging different prices for quantity amounts 
C) using variable costing for some products and full costing for other products when setting prices 
D) charging different prices to different customers or clients for the same products or services 
A) setting different prices for different products 
B) charging different prices for quantity amounts 
C) using variable costing for some products and full costing for other products when setting prices 
D) charging different prices to different customers or clients for the same products or services

Question 15

In a competitive market with differentiated products like cameras, the key factor(s)affecting pricing decisions is/are the:

Accepted Answer

A) customer's willingness to pay 
B) price charged for alternative products 
C) cost of producing and delivering the product 
D) All of these answers are correct. 
A) customer's willingness to pay 
B) price charged for alternative products 
C) cost of producing and delivering the product 
D) All of these answers are correct.

Question 16

One market-based pricing method is called the time and materials method.

Accepted Answer

A) True 
 B)False

Question 17

Short-run pricing decisions include adjusting product mix in a competitive environment.

Accepted Answer

A) True 
 B)False

Question 18

Ski Valet provides materials that let people teach themselves how to snow ski. It has six different skill-level programs. Each one includes visual and audio learning aids along with a workbook that can be submitted to the company for grading and evaluation purposes, if the person so desires.
The accounting system of Ski Valet is very traditional in its reporting functions with the calendar year being the company's fiscal year. It includes an abundance of information that can be used for various reporting purposes.
The company has found that any new idea soon runs its course with an effective life of about three years. Therefore, the company is always in the development stage of some new program. Program development requires experts in the area to provide the know-how of the item being developed and a development team that puts together the video, audio, and workbook materials. The actual costs of reproducing the packages are relatively inexpensive when compared to the development costs.
Required:
How might product life-cycle budgeting aid the company in improving its overall operations?

Accepted Answer

Because the product life cycle for Ski V

Question 19

Reverse engineering has the objective of reducing costs while still satisfying customer needs.

Accepted Answer

A) True 
 B)False

Question 20

A value-added cost is a cost that, if eliminated,would increase the actual or perceived value or utility (usefulness)customers experience from using the product or service.

Accepted Answer

A) True 
 B)False

Most of a product's life-cycle costs are locked in by decisions made during the ________ business function of the value chain.

Fluctuations in exchange rates between different currencies can influence the:

Life-cycle costing tracks and accumulates business function costs across the entire value chain from a product's initial R&D to its final customer service and support.

For most products, the majority of costs are incurred during the ________ business function of the value chain.

Direct material costs are locked in when they are:

Whether the firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces must be considered.

Relevant costs for target pricing are:

All of the following are associated with target costing EXCEPT:

When demand is elastic, an increase in price will lead to an increase in profits.

For manufacturing firms, product costs are generally locked in during the manufacturing stage.

Answer the following questions using the information below: Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division. -Price discrimination is the practice of:

In a competitive market with differentiated products like cameras, the key factor(s)affecting pricing decisions is/are the:

One market-based pricing method is called the time and materials method.

Short-run pricing decisions include adjusting product mix in a competitive environment.

Reverse engineering has the objective of reducing costs while still satisfying customer needs.

A value-added cost is a cost that, if eliminated,would increase the actual or perceived value or utility (usefulness)customers experience from using the product or service.

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 12: Pricing Decisions and Cost Management

Most of a product's life-cycle costs are locked in by decisions made during the ________ business function of the value chain.

Fluctuations in exchange rates between different currencies can influence the:

Life-cycle costing tracks and accumulates business function costs across the entire value chain from a product's initial R&D to its final customer service and support.

For most products, the majority of costs are incurred during the ________ business function of the value chain.

Direct material costs are locked in when they are:

Whether the firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces must be considered.

Relevant costs for target pricing are:

All of the following are associated with target costing EXCEPT:

When demand is elastic, an increase in price will lead to an increase in profits.

For manufacturing firms, product costs are generally locked in during the manufacturing stage.

Answer the following questions using the information below: Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division. -Price discrimination is the practice of:

In a competitive market with differentiated products like cameras, the key factor(s)affecting pricing decisions is/are the:

One market-based pricing method is called the time and materials method.

Short-run pricing decisions include adjusting product mix in a competitive environment.

Reverse engineering has the objective of reducing costs while still satisfying customer needs.

A value-added cost is a cost that, if eliminated,would increase the actual or perceived value or utility (usefulness)customers experience from using the product or service.

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters