Question 1

Which of the following activities is unique to a manufacturing organisation's value chain?

Accepted Answer

A)  Distribution management 
B)  Customer service 
C)  Product manufacture 
D)  Marketing and sales 
A)  Distribution management 
B)  Customer service 
C)  Product manufacture 
D)  Marketing and sales C

Question 2

Kaizen costing is concerned with continuous improvement in product cost, quality, and functionality.

Accepted Answer

A) True 
 B)False  True

Question 3

Life cycle costing can be used to identify unprofitable products due to high costs at the end of a product's life. Which of the following is the best example of such a product?

Accepted Answer

A)  Nuclear reactors 
B)  Cherry orchards 
C)  Accounting firms 
D)  Universities 
A)  Nuclear reactors 
B)  Cherry orchards 
C)  Accounting firms 
D)  Universities A

Question 4

Market-based prices are influenced by product differentiation and competition.

Accepted Answer

A) True 
 B)False

Question 5

Kaizen costing is similar to a budget except that kaizen costing

Accepted Answer

A)  Does not use dollar amounts 
B)  Cannot be implemented in service organisations 
C)  Requires the use of the high-low method to forecast revenues 
D)  Provides for explicit cost reductions 
A)  Does not use dollar amounts 
B)  Cannot be implemented in service organisations 
C)  Requires the use of the high-low method to forecast revenues 
D)  Provides for explicit cost reductions

Question 6

FRM's managers have recently introduced new, more efficient equipment for feeding chickens. Under which of the following assumptions would life cycle costing be best applied?

Accepted Answer

A)  The product is being sold at a loss 
B)  The product is being sold at a small profit 
C)  The product is being sold at a loss, but expected to add to profits over time 
D)  The product is being sold at a small profit, which is expected to decline over time 
A)  The product is being sold at a loss 
B)  The product is being sold at a small profit 
C)  The product is being sold at a loss, but expected to add to profits over time 
D)  The product is being sold at a small profit, which is expected to decline over time

Question 7

Life cycle costing is an alternative to job order and process costing.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following formulas calculates price elasticity of demand?

Accepted Answer

A)  ln (1 + % change in quantity sold) / ln (1 + % change in price) 
B)  (1 + % change in quantity sold) / (1 + % change in price) 
C)  % change in quantity sold / % change in price 
D)  ln (1 - % change in quantity sold) / ln (1 - % change in price) 
A)  ln (1 + % change in quantity sold) / ln (1 + % change in price) 
B)  (1 + % change in quantity sold) / (1 + % change in price) 
C)  % change in quantity sold / % change in price 
D)  ln (1 - % change in quantity sold) / ln (1 - % change in price)

Question 9

Target costing works best when production processes are simple, rather than complex.

Accepted Answer

A) True 
 B)False

Question 10

Which of these activities is not typically considered to be part of a manufacturing organisation's value chain?

Accepted Answer

A)  Making journal entries 
B)  Handling customer complaints 
C)  Designing and engineering new products 
D)  Manufacturing products 
A)  Making journal entries 
B)  Handling customer complaints 
C)  Designing and engineering new products 
D)  Manufacturing products

Question 11

The statement concerning customer profitability analysis that is not true is

Accepted Answer

A)  To conduct this analysis it is necessary to identify the resources consumed and the associated costs of servicing customers 
B)  The customer or customer groupings become the cost object 
C)  There is not normally a connection between more profitable products or services and more profitable customers 
D)  None of the above, i.e. all the statements are true 
A)  To conduct this analysis it is necessary to identify the resources consumed and the associated costs of servicing customers 
B)  The customer or customer groupings become the cost object 
C)  There is not normally a connection between more profitable products or services and more profitable customers 
D)  None of the above, i.e. all the statements are true

Question 12

BLG produces and sells yachts for wealthy customers. BLG's accountants produced the data shown below as a basis for client negotiations for the coming year:   Assume that all the preceding costs are avoidable. The company will incur an additional $800 in unavoidable costs during the coming year. BLG's managers want to achieve a profit margin of 80% based on total costs. BLG's system is best described as

Accepted Answer

A)  Market-based pricing 
B)  Life cycle costing 
C)  Cost-based pricing 
D)  Kaizen costing 
A)  Market-based pricing 
B)  Life cycle costing 
C)  Cost-based pricing 
D)  Kaizen costing

Question 13

Life cycle costing considers cash flows over the entire life of products that have high development or decommissioning costs.

Accepted Answer

A) True 
 B)False

Question 14

Low prices are not considered predatory if

Accepted Answer

A)  They can be justified by cost differences 
B)  They are collusive 
C)  Customers do not complain about them 
D)  Price elasticity of demand is above 1.00 
A)  They can be justified by cost differences 
B)  They are collusive 
C)  Customers do not complain about them 
D)  Price elasticity of demand is above 1.00

Question 15

A target cost is the minimum cost a company should strive for to obtain its desired profit margin.

Accepted Answer

A) True 
 B)False

Question 16

In target costing, managers can

Accepted Answer

A)  Focus on motivating customers to pay a higher price 
B)  Push some cost reductions to suppliers 
C)  Try to establish their product as a commodity 
D)  Justify higher costs by making production processes more complex 
A)  Focus on motivating customers to pay a higher price 
B)  Push some cost reductions to suppliers 
C)  Try to establish their product as a commodity 
D)  Justify higher costs by making production processes more complex

Question 17

In cost-based pricing, markup percentages often originate from general industry practice.

Accepted Answer

A) True 
 B)False

Question 18

Roland's Recycling accepts and recycles or disposes of hazardous waste for the city. It charges the city for waste disposal based on the amount of waste handled. Its contract specifies the sites that have been set up for waste drop-off will be cleaned up completely when the contract eventually expires. The owners of Roland's have been contacted by the council to set up a similar service for people who live in the area. Roland's accountant is preparing an analysis for the owners. Recommend an appropriate costing method. Describe the method and explain the reasons for your choice.
Correct

Accepted Answer

When products incur high start-up costs

Question 19

Life cycle costing is used when a product is initially sold at a high profit.

Accepted Answer

A) True 
 B)False

Question 20

Kaizen costing concepts can be applied to

Accepted Answer

A)  Variable costs only 
B)  Fixed costs only 
C)  Both variable and fixed costs 
D)  Mixed costs only 
A)  Variable costs only 
B)  Fixed costs only 
C)  Both variable and fixed costs 
D)  Mixed costs only

Which of the following activities is unique to a manufacturing organisation's value chain?

Kaizen costing is concerned with continuous improvement in product cost, quality, and functionality.

Life cycle costing can be used to identify unprofitable products due to high costs at the end of a product's life. Which of the following is the best example of such a product?

Market-based prices are influenced by product differentiation and competition.

Kaizen costing is similar to a budget except that kaizen costing

FRM's managers have recently introduced new, more efficient equipment for feeding chickens. Under which of the following assumptions would life cycle costing be best applied?

Life cycle costing is an alternative to job order and process costing.

Which of the following formulas calculates price elasticity of demand?

Target costing works best when production processes are simple, rather than complex.

Which of these activities is not typically considered to be part of a manufacturing organisation's value chain?

The statement concerning customer profitability analysis that is not true is

Life cycle costing considers cash flows over the entire life of products that have high development or decommissioning costs.

Low prices are not considered predatory if

A target cost is the minimum cost a company should strive for to obtain its desired profit margin.

In target costing, managers can

In cost-based pricing, markup percentages often originate from general industry practice.

Life cycle costing is used when a product is initially sold at a high profit.

Kaizen costing concepts can be applied to

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters

Exam 15: The Strategic Management of Costs and Revenues

Which of the following activities is unique to a manufacturing organisation's value chain?

Kaizen costing is concerned with continuous improvement in product cost, quality, and functionality.

Life cycle costing can be used to identify unprofitable products due to high costs at the end of a product's life. Which of the following is the best example of such a product?

Market-based prices are influenced by product differentiation and competition.

Kaizen costing is similar to a budget except that kaizen costing

FRM's managers have recently introduced new, more efficient equipment for feeding chickens. Under which of the following assumptions would life cycle costing be best applied?

Life cycle costing is an alternative to job order and process costing.

Which of the following formulas calculates price elasticity of demand?

Target costing works best when production processes are simple, rather than complex.

Which of these activities is not typically considered to be part of a manufacturing organisation's value chain?

The statement concerning customer profitability analysis that is not true is

Life cycle costing considers cash flows over the entire life of products that have high development or decommissioning costs.

Low prices are not considered predatory if

A target cost is the minimum cost a company should strive for to obtain its desired profit margin.

In target costing, managers can

In cost-based pricing, markup percentages often originate from general industry practice.

Life cycle costing is used when a product is initially sold at a high profit.

Kaizen costing concepts can be applied to

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters