Question 1

On a microeconomic pricing theory graph,the total revenue line and the total cost line cross

Accepted Answer

A) once. 
B) twice. 
C) three times. 
D) four times. 
A) once. 
B) twice. 
C) three times. 
D) four times.

Question 2

Maximizing profits has been and continues to be a dominant factor in price setting.

Accepted Answer

A) True 
 B)False

Question 3

Service-oriented businesses take the same approach to pricing their "product" as product-oriented businesses.

Accepted Answer

A) True 
 B)False

Question 4

A company producing standardized products for its customers can be more conservative in its pricing strategy than a company producing custom-designed items.

Accepted Answer

A) True 
 B)False

Question 5

When gross margin pricing is used,the markup percentage includes

Accepted Answer

A) desired profits plus total selling,general,and administrative expenses. 
B) only the desired profit factor. 
C) total costs and expenses. 
D) desired profits plus total fixed production costs plus total selling,general,and administrative expenses. 
A) desired profits plus total selling,general,and administrative expenses. 
B) only the desired profit factor. 
C) total costs and expenses. 
D) desired profits plus total fixed production costs plus total selling,general,and administrative expenses.

Question 6

The change in total cost by a one-unit change in output is called the

Accepted Answer

A) marginal profit. 
B) marginal revenue. 
C) marginal demand. 
D) marginal cost. 
A) marginal profit. 
B) marginal revenue. 
C) marginal demand. 
D) marginal cost.

Question 7

Identifying the maximum price the market will accept falls under the performing stage of the management process.

Accepted Answer

A) True 
 B)False

Question 8

A negotiated transfer price is one that is bargained for between the managers of the buying and selling divisions of a company.

Accepted Answer

A) True 
 B)False

Question 9

The denominator of the gross margin markup percentage is total production costs.

Accepted Answer

A) True 
 B)False

Question 10

A primary internal factor to be considered in product pricing is the cost of producing the product or service.

Accepted Answer

A) True 
 B)False

Question 11

Jason Sears has an opportunity to start an automobile pollution inspection business.After extensive studies,he has developed the following set of projected annual data on which to make his decision:
   
Jason believes that his company will inspect 100,000 automobiles per year.The company earns an average of 20 percent return on its assets.
a.Compute the projected cost for inspecting each automobile.
b.Determine the price to charge for inspecting each automobile using the gross margin pricing method.
c.Using the return on assets pricing method,compute the unit price to charge for this service.

Accepted Answer

a.Unit cost computed:
@#IMG-DLM& 
b.Price using th

Question 12

The state of Ohio has passed a law requiring that every automobile be inspected at least once a year for pollution control.Anson Enterprises is considering entering into this type of business.After extensive studies,Mark Anson has developed the following set of projected annual data on which to make his decision:   Anson believes that his company will inspect 100,000 automobiles per year.The company earns an average of 18.75 percent return on its assets.
-The price to be charged for inspecting each automobile using the time and materials pricing method would be calculated as

Accepted Answer

A) ($913,000.00 $\div$ 100,000)+ {($913,000.00 $\div$ 100,000)× [($90,000 + $290,000)$\div$ $913,000.00]}. 
B) ($1,203,000.00 $\div$ 100,000)+ [($1,203,000.00 $\div$ 100,000)× ($90,000 $\div$ $1,203,000.00)]. 
C) ($1,203,000.00 $\div$ 100,000)+ [($500,000 $\div$ 100,000)× 0.1875]. 
D) none of these options. 
A) ($913,000.00 $\div$ 100,000)+ {($913,000.00 $\div$ 100,000)× [($90,000 + $290,000)$\div$ $913,000.00]}. 
B) ($1,203,000.00 $\div$ 100,000)+ [($1,203,000.00 $\div$ 100,000)× ($90,000 $\div$ $1,203,000.00)]. 
C) ($1,203,000.00 $\div$ 100,000)+ [($500,000 $\div$ 100,000)× 0.1875]. 
D) none of these options.

Question 13

Both internal and external factors can influence the pricing decision.

Accepted Answer

A) True 
 B)False

Question 14

The state of Ohio has passed a law requiring that every automobile be inspected at least once a year for pollution control.Anson Enterprises is considering entering into this type of business.After extensive studies,Mark Anson has developed the following set of projected annual data on which to make his decision:   Anson believes that his company will inspect 100,000 automobiles per year.The company earns an average of 18.75 percent return on its assets.
-The price to be charged for inspecting each automobile using the gross margin pricing method would be calculated as

Accepted Answer

A) ($1,203,000.00 $\div$ 100,000)+ [($1,203,000.00 $\div$100,000)× ($90,000 $\div$$1,203,000.00)]. 
B) ($1,203,000.00 $\div$ 100,000)+ [($500,000 $\div$ 100,000)× 0.1875]. 
C) ($913,000.00 $\div$ 100,000)+ {($913,000.00 $\div$ 100,000)´ [($90,000 + $290,000)$\div$ $913,000.00]}. 
D) none of these options. 
A) ($1,203,000.00 $\div$ 100,000)+ [($1,203,000.00 $\div$100,000)× ($90,000 $\div$$1,203,000.00)]. 
B) ($1,203,000.00 $\div$ 100,000)+ [($500,000 $\div$ 100,000)× 0.1875]. 
C) ($913,000.00 $\div$ 100,000)+ {($913,000.00 $\div$ 100,000)´ [($90,000 + $290,000)$\div$ $913,000.00]}. 
D) none of these options.

Question 15

To stay in business,a company must have a selling price that is

Accepted Answer

A) acceptable to the customer. 
B) able to recover the variable costs of production. 
C) the highest in the marketplace. 
D) equal to or lower than the company's costs per unit. 
A) acceptable to the customer. 
B) able to recover the variable costs of production. 
C) the highest in the marketplace. 
D) equal to or lower than the company's costs per unit.

Question 16

When a buying division elects to purchase from an outside supplier,

Accepted Answer

A) the impact on overall company profits is usually not considered in the decision. 
B) only fixed costs should be included in the decision analysis. 
C) the price from the outside supplier is likely to be more than the incremental cost to the supplying division. 
D) overall company profits should be enhanced. 
A) the impact on overall company profits is usually not considered in the decision. 
B) only fixed costs should be included in the decision analysis. 
C) the price from the outside supplier is likely to be more than the incremental cost to the supplying division. 
D) overall company profits should be enhanced.

Question 17

The change in total revenue caused by a one-unit change in output is called the

Accepted Answer

A) marginal profit. 
B) marginal revenue. 
C) marginal demand. 
D) marginal cost. 
A) marginal profit. 
B) marginal revenue. 
C) marginal demand. 
D) marginal cost.

Question 18

How can the use of transfer pricing allow a division to be evaluated as a profit center,even if it has no sales to outsiders?

Accepted Answer

When transfer prices are used,a division

Question 19

Factors that influence the pricing decision are only external in nature.

Accepted Answer

A) True 
 B)False

Exam 25: Pricing Decisions, including Target Costing and Transfer Pricing

On a microeconomic pricing theory graph,the total revenue line and the total cost line cross

Maximizing profits has been and continues to be a dominant factor in price setting.

Service-oriented businesses take the same approach to pricing their "product" as product-oriented businesses.

A company producing standardized products for its customers can be more conservative in its pricing strategy than a company producing custom-designed items.

When gross margin pricing is used,the markup percentage includes

The change in total cost by a one-unit change in output is called the

Identifying the maximum price the market will accept falls under the performing stage of the management process.

A negotiated transfer price is one that is bargained for between the managers of the buying and selling divisions of a company.

The denominator of the gross margin markup percentage is total production costs.

A primary internal factor to be considered in product pricing is the cost of producing the product or service.

Both internal and external factors can influence the pricing decision.

To stay in business,a company must have a selling price that is

When a buying division elects to purchase from an outside supplier,

The change in total revenue caused by a one-unit change in output is called the

How can the use of transfer pricing allow a division to be evaluated as a profit center,even if it has no sales to outsiders?

Factors that influence the pricing decision are only external in nature.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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