Exam 15: The Strategic Management of Costs and Revenues

Kaizen costing and target costing are two names for the same thing.

Because of grants, donations, and interest from endowed funds, not-for-profit organisations generally

TTV's managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5,000 and total variable costs are $4,000, based on production of 400 units. The following values may be useful: TTV's price elasticity of demand is

Charging different prices at different times to reduce capacity constraints is called

Managers determine what a customer is willing to pay for a product or service under which one of these pricing method?

The decisions made during the design phase affect a large portion of product and manufacturing process costs. Therefore, target costing focuses on the design phase.

Compare and contrast target costing with kaizen costing. Correct

The "death spiral" may be a problem when managers use

WDY currently sells its primary product for $85 per unit, with a profit margin of 30%. Cost of goods sold totals 40% of the product's total cost. WDY's managers are considering implementing a kaizen costing system. If WDY is successful in achieving its kaizen goal, the reduced nonmanufacturing cost (i.e., the cost excluding the product cost) per unit will be

WDY currently sells its primary product for $85 per unit, with a profit margin of 30%. Cost of goods sold totals 40% of the product's total cost. WDY's managers are considering implementing a kaizen costing system. WDY's current product cost (direct costs and manufacturing overhead) per unit is

Kaizen costing relies on price forecasts.

When two or more organisations conspire to set prices above a competitive price, they are engaging in

Implementing a computer application to reduce non-value added paperwork and improve inventory tracking would result most directly from

Consumer surveys, focus groups, and market research are

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. Suppose BLG allocates unavoidable corporate costs based on total avoidable costs. The selling price of Sport Star's yacht will be

Give a complete but concise explanation of the target costing cycle. Correct

Target costing involves not only cost, but also product quality and functionality.

Target costing is a technique to improve long-term profitability by considering product costs at the design phase.

For many organisations:

The Internet is likely to