Question 1

Which of the following is true regarding expenses related to specific market structure types?

Accepted Answer

A)  Monopolistic competition and oligopolies are the only structures where costs of differentiation have an impact. 
B)  Both monopolies and monopolistic competition structures normally must expend legal and lobbying costs. 
C)  In perfect competition and monopolistic competition, differentiation costs have an impact. 
D)  In perfect competition and oligopolies, there are no special expenses related to the structure of the organization. 
A)  Monopolistic competition and oligopolies are the only structures where costs of differentiation have an impact. 
B)  Both monopolies and monopolistic competition structures normally must expend legal and lobbying costs. 
C)  In perfect competition and monopolistic competition, differentiation costs have an impact. 
D)  In perfect competition and oligopolies, there are no special expenses related to the structure of the organization.

Question 2

Normandy Company has the following information pertaining to its two divisions for 2014:   Common expenses are $24,000 for 2014.
What is the segment margin for Division Y?

Accepted Answer

A)  $310,000 
B)  $210,000 
C)  $240,000 
D)  $40,000 
A)  $310,000 
B)  $210,000 
C)  $240,000 
D)  $40,000

Question 3

Target costing sets costs based on the price that customers are willing to pay.

Accepted Answer

A) True 
 B)False

Question 4

Custom Chrome Enterprises produces mag wheels for motorcycles. During 2014, Custom Chrome expected to sell 275,000 mag wheels at $185 each. The actual sales for 2014 were 333,500 mag wheels at $179 each.
1- Calculate:
a. Sales Price Variance
b. Sales Volume Variance
c. Overall (Total) Sales Variance
Indicate whether Favorable or Unfavorable.
2- Calculate the variances if actual sales had been 266,000 mag wheels at $150 each.

Accepted Answer

1-
a. Sales Price Variance = (Actual Pri

Question 5

Johanson Company had the following information:   What is the markup based on prime costs?

Accepted Answer

A)  300.0% 
B)  166.7% 
C)  50.0% 
D)  133.3% 
A)  300.0% 
B)  166.7% 
C)  50.0% 
D)  133.3%

Question 6

The market size variance is the difference between actual and budgeted industry sales in units, multiplied by the budgeted market share percentage, times the:

Accepted Answer

A)  actual market share percentage 
B)  budgeted market share percentage 
C)  actual average unit contribution margin 
D)  budgeted average unit contribution margin 
A)  actual market share percentage 
B)  budgeted market share percentage 
C)  actual average unit contribution margin 
D)  budgeted average unit contribution margin

Question 7

The following information pertains to Guillotine Corporation:   What is the value of the ending inventory using the variable costing method?

Accepted Answer

A)  $240,000 
B)  $420,000 
C)  $360,000 
D)  $350,000 
A)  $240,000 
B)  $420,000 
C)  $360,000 
D)  $350,000

Question 8

Under absorption costing, when production is less than sales volume, the profits, using variable costing procedures, will be:

Accepted Answer

A)  less than 
B)  greater than 
C)  equal to 
D)  randomly different than 
A)  less than 
B)  greater than 
C)  equal to 
D)  randomly different than

Question 9

The pricing of a new product at a low initial price to build market share quickly is called __________.

Accepted Answer

The answer of The pricing of a new product at...

Question 10

Bernardo Company reported the following units of production and sales for August and September 2014:   Net income under absorption costing for August was $40,000; net income under variable costing for September was $50,000. Fixed manufacturing costs were $600,000 for each month.
How much was net income for August using variable costing?

Accepted Answer

A)  $40,000 
B)  $20,000 
C)  $(20,000) 
D)  $(40,000) 
A)  $40,000 
B)  $20,000 
C)  $(20,000) 
D)  $(40,000)

Question 11

Which of the following could be considered a segment?

Accepted Answer

A)  division 
B)  product-line 
C)  sales territory 
D)  all of the above 
A)  division 
B)  product-line 
C)  sales territory 
D)  all of the above

Question 12

Many companies base prices on cost while other companies use target-costing strategies.

Accepted Answer

A) True 
 B)False

Question 13

Sarandon Company has the following information pertaining to its two divisions for 2014:   Common expenses are $12,000 for 2014.
What is the segment margin for Division B?

Accepted Answer

A)  $155,000 
B)  $105,000 
C)  $55,000 
D)  $20,000 
A)  $155,000 
B)  $105,000 
C)  $55,000 
D)  $20,000

Question 14

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales volume variance is

Accepted Answer

A)  $68,000 (U). 
B)  $8,000 (U). 
C)  $160,000 (U). 
D)  $168,000 (U). 
A)  $68,000 (U). 
B)  $8,000 (U). 
C)  $160,000 (U). 
D)  $168,000 (U).

Question 15

Using variable costing procedures, net income will be less than __________ when production is less than sales volume.

Accepted Answer

The answer of Using variable costing procedures, net income will...

Question 16

The pricing of a new product at a low initial price to build market share quickly is called:

Accepted Answer

A)  Target costing 
B)  Predatory pricing 
C)  Price skimming 
D)  Penetration pricing 
A)  Target costing 
B)  Predatory pricing 
C)  Price skimming 
D)  Penetration pricing

Question 17

What is the primary difference between variable and absorption costing?

Accepted Answer

A)  inclusion of fixed selling expenses in product costs 
B)  inclusion of variable factory overhead in period costs 
C)  inclusion of fixed selling expenses in period costs 
D)  inclusion of fixed factory overhead in product costs 
A)  inclusion of fixed selling expenses in product costs 
B)  inclusion of variable factory overhead in period costs 
C)  inclusion of fixed selling expenses in period costs 
D)  inclusion of fixed factory overhead in product costs

Question 18

The markup is pure profit, it does not include all costs not included in the base cost.

Accepted Answer

A) True 
 B)False

Question 19

Figure 18-1 The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Bayview sold 1,000,000 cases last year to the following types of customers:
  The drugstore chains have special handling costs of $0.20 a case and increased administrative assistance costing $45,000 per year.
The gas station chains require special marketing promotions that cost $50,000. Sales commissions of 10% are paid.
The supermarket chains order electronically through EDI which costs $25,000 annually. Bayview is responsible for shipping costs, which totaled $0.50 a case and special labels costing $0.02 per bottle
Local pharmacies have special handling costs of $0.10 per case and sales commissions are paid to agents costing $0.25 per case. Bad debt expense averages 10% of sales.
Refer to Figure 18-1. What is the profit per case for drugstore chains?

Accepted Answer

A)  $5.00 per case 
B)  $2.20 per case 
C)  $2.68 per case 
D)  $2.32 per case 
A)  $5.00 per case 
B)  $2.20 per case 
C)  $2.68 per case 
D)  $2.32 per case

Question 20

Octagonal Company has the following information for 2014:   There were no beginning inventories.
What is the cost of ending inventory for Octagonal using the variable costing method?

Accepted Answer

A)  $80,000 
B)  $180,000 
C)  $120,000 
D)  $300,000 
A)  $80,000 
B)  $180,000 
C)  $120,000 
D)  $300,000

Which of the following is true regarding expenses related to specific market structure types?

Normandy Company has the following information pertaining to its two divisions for 2014: Common expenses are $24,000 for 2014. What is the segment margin for Division Y?

Target costing sets costs based on the price that customers are willing to pay.

Johanson Company had the following information: What is the markup based on prime costs?

The market size variance is the difference between actual and budgeted industry sales in units, multiplied by the budgeted market share percentage, times the:

The following information pertains to Guillotine Corporation: What is the value of the ending inventory using the variable costing method?

Under absorption costing, when production is less than sales volume, the profits, using variable costing procedures, will be:

The pricing of a new product at a low initial price to build market share quickly is called __________.

Which of the following could be considered a segment?

Many companies base prices on cost while other companies use target-costing strategies.

Sarandon Company has the following information pertaining to its two divisions for 2014: Common expenses are $12,000 for 2014. What is the segment margin for Division B?

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales volume variance is

Using variable costing procedures, net income will be less than __________ when production is less than sales volume.

The pricing of a new product at a low initial price to build market share quickly is called:

What is the primary difference between variable and absorption costing?

The markup is pure profit, it does not include all costs not included in the base cost.

Octagonal Company has the following information for 2014: There were no beginning inventories. What is the cost of ending inventory for Octagonal using the variable costing method?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 18: Pricing and Profitability Analysis

Which of the following is true regarding expenses related to specific market structure types?

Normandy Company has the following information pertaining to its two divisions for 2014: Common expenses are $24,000 for 2014. What is the segment margin for Division Y?

Target costing sets costs based on the price that customers are willing to pay.

Johanson Company had the following information: What is the markup based on prime costs?

The market size variance is the difference between actual and budgeted industry sales in units, multiplied by the budgeted market share percentage, times the:

The following information pertains to Guillotine Corporation: What is the value of the ending inventory using the variable costing method?

Under absorption costing, when production is less than sales volume, the profits, using variable costing procedures, will be:

The pricing of a new product at a low initial price to build market share quickly is called __________.

Which of the following could be considered a segment?

Many companies base prices on cost while other companies use target-costing strategies.

Sarandon Company has the following information pertaining to its two divisions for 2014: Common expenses are $12,000 for 2014. What is the segment margin for Division B?

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales volume variance is

Using variable costing procedures, net income will be less than __________ when production is less than sales volume.

The pricing of a new product at a low initial price to build market share quickly is called:

What is the primary difference between variable and absorption costing?

The markup is pure profit, it does not include all costs not included in the base cost.

Octagonal Company has the following information for 2014: There were no beginning inventories. What is the cost of ending inventory for Octagonal using the variable costing method?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters