Exam 15: The Strategic Management of Costs and Revenues

List one advantage and one disadvantage for using target and kaizen costing. Correct

The Internet can often give suppliers information about their customers' inventory levels. Suppliers can then use this information to

Life cycle costing can be used to focus managers' attention on

Peak load pricing refers to the illegal practice of charging different prices at different times to reduce capacity constraints.

BBM's managers are attempting to build a new product, a better mousetrap. They began by determining the features customers wanted and what they would pay for those features. BBM's engineers then reverse-engineered a competitor's product to understand its design and related production processes. Their analysis indicated that customers would pay $10.00 for a better mousetrap. What process did BBM use according to the preceding scenario?

Explain how value chain analysis helps managers identify value-added and non-value-added activities. Correct

Describe market-based pricing and give an example of a product for which this pricing method would be appropriate Correct

Paris Perfumery sells two perfumes, L'Amor and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows: The sales price variance for L'Amour was

Target costing is most likely to be successful when the

Which of the following formulas calculates the profit-maximising price?

In kaizen costing, after targeted cost reduction goals are set, each department is assigned responsibility for specific cost reduction amounts.

The supply chain involves suppliers, but not customers.

Market-based prices are typically based on some measure of customer demand.

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. Which customer's yacht will have the lowest total cost if unavoidable costs are allocated based on the cost of a basic yacht?

Life-cycle costing is a

Managers can achieve planned cost reductions in a kaizen costing system through

Which of these is the main disadvantage of market-based pricing?

Customers that are found to be the least profitable should be dropped.

The difference between planned and actual revenue is known as:

Kaizen costing is a technique aimed at improvement of short-term profitability.