Question 1

___________ refers to charging different prices to different customers for essentially the same product.

Accepted Answer

A)  Gouging 
B)  Price discrimination 
C)  Skimming 
D)  Penetration pricing 
A)  Gouging 
B)  Price discrimination 
C)  Skimming 
D)  Penetration pricing

Question 2

Consider the following portion of a segmented income statement for the year just ended.Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses.   What would be the effect on the firm's operating income if Division X were discontinued?

Accepted Answer

A)  increase $10,000 
B)  decrease $40,000 
C)  decrease $100,000 
D)  decrease $10,000 
A)  increase $10,000 
B)  decrease $40,000 
C)  decrease $100,000 
D)  decrease $10,000

Question 3

Anderson Company manufactures a variety of toys and games.John Boone, president, is disappointed in the sales of a new board game.The game sold only 10,000 units in 2011 when 30,000 were projected.Sales for 2012 look no better.At $100 per game, it is not a hot seller.Direct costs of the board game are $56 variable cost and $100,000 fixed.John is considering several options.Option One: Cut the price to $70 and perhaps sell 15,000 units.Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000.Anticipated volume for this option is 10,000 units.Option Three: Cut the price to $80 and include a $10 mail-in rebate offer.It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed.
- What is the profit (loss) from Option One?

Accepted Answer

A)  $1,050,000 
B)  $210,000 
C)  $950,000 
D)  $110,000 
A)  $1,050,000 
B)  $210,000 
C)  $950,000 
D)  $110,000

Question 4

_______________ is the pricing of a new product at a low initial price to build market share quickly.

Accepted Answer

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

Question 5

Which of the following statements is FALSE?

Accepted Answer

A)  The markup is a percentage applied to base cost. 
B)  The markup is an absolute rule. 
C)  A major advantage of markup pricing is that standard markups are easy to apply. 
D)  The markup can be calculated using a variety of bases. 
A)  The markup is a percentage applied to base cost. 
B)  The markup is an absolute rule. 
C)  A major advantage of markup pricing is that standard markups are easy to apply. 
D)  The markup can be calculated using a variety of bases.

Question 6

Figure 18-1 The Bayview 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 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.
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.
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 customer type is the most profitable ?

Accepted Answer

A)  local pharmacies 
B)  drugstore chains 
C)  supermarket chains 
D)  gas station chains 
A)  local pharmacies 
B)  drugstore chains 
C)  supermarket chains 
D)  gas station chains

Question 7

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Accepted Answer

A)  equal. 
B)  less. 
C)  greater. 
D)  twice as much. 
A)  equal. 
B)  less. 
C)  greater. 
D)  twice as much.

Question 8

Ramon Company reported the following units of production and sales for June and July 2011:   Net income under absorption costing for June was $40,000; net income under variable costing for July was $50,000.Fixed manufacturing costs were $600,000 for each month.
How much was net income for June using variable costing?

Accepted Answer

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

Question 9

Ramon Company reported the following units of production and sales for June and July 2011:   Net income under absorption costing for June was $40,000; net income under variable costing for July was $50,000.Fixed manufacturing costs were $600,000 for each month.
How much was net income for July using absorption costing?

Accepted Answer

A)  $50,000 
B)  $20,000 
C)  $80,000 
D)  $40,000 
A)  $50,000 
B)  $20,000 
C)  $80,000 
D)  $40,000

Question 10

Which of the following markets is characterized by the following: only a few firms in the industry, a fairly unique product, difficult entry into the industry, and spending for differentiation of the product?

Accepted Answer

A)  perfectly competitive market 
B)  monopolistic competition 
C)  monopoly 
D)  oligopoly 
A)  perfectly competitive market 
B)  monopolistic competition 
C)  monopoly 
D)  oligopoly

Question 11

A successful firm

Accepted Answer

A)  places appropriate emphasis on profit, is aware of economic and environmental trends outside the company, and measures impact on the community and employees. 
B)  values numeric profit and encourage employees to do what is in their power to increase profits. 
C)  ensures there are always monthly, quarterly, and annual profit and lost statements as the sole measure of success so that all employees are aware of the success or failure of a period. 
D)  none of these 
A)  places appropriate emphasis on profit, is aware of economic and environmental trends outside the company, and measures impact on the community and employees. 
B)  values numeric profit and encourage employees to do what is in their power to increase profits. 
C)  ensures there are always monthly, quarterly, and annual profit and lost statements as the sole measure of success so that all employees are aware of the success or failure of a period. 
D)  none of these

Question 12

Monopolistic competition is best defined as

Accepted Answer

A)  a structure that has many buyers and sellers, but the products are differentiated on some basis. 
B)  a structure where customers are willing to pay a little more for the unique feature that appeals to them. 
C)  a structure that combines perfect competition and monopoly, but is closer to a competitive situation. 
D)  all of these. 
A)  a structure that has many buyers and sellers, but the products are differentiated on some basis. 
B)  a structure where customers are willing to pay a little more for the unique feature that appeals to them. 
C)  a structure that combines perfect competition and monopoly, but is closer to a competitive situation. 
D)  all of these.

Question 13

According to Hansen and Mowen, which of the following stages comes first?

Accepted Answer

A)  Introduction 
B)  Growth 
C)  Development 
D)  Decline 
A)  Introduction 
B)  Growth 
C)  Development 
D)  Decline

Question 14

The majority of the product cost is "locked in" during which of the following life-cycle stages?

Accepted Answer

A)  Introduction 
B)  Growth 
C)  Development 
D)  Decline 
A)  Introduction 
B)  Growth 
C)  Development 
D)  Decline

Question 15

Many products have a predictable profit or product life cycle.Describe the product life cycle from the marketing perspective.In addition, graph profit versus the different phases.Finally, discuss the impact of the product life cycle on products, learning effects, setups, purchasing, and marketing expenses.

Accepted Answer

The product life cycle describes the pro

Question 16

Figure 18-1 The Bayview 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 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.
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.
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)  $4.50 per case 
B)  $2.20 per case 
C)  $2.35 per case 
D)  $2.15 per case 
A)  $4.50 per case 
B)  $2.20 per case 
C)  $2.35 per case 
D)  $2.15 per case

Question 17

An alternative to the limitation of focusing on profits would be

Accepted Answer

A)  communicating other measures are important but continue to base rewards on profits. 
B)  overstate the value of ending inventory in order to reduce cost of goods sold and improve operating income performance. 
C)  focus on long-term objectives and appropriate emphasis on profit. 
D)  analyze the product mix. 
A)  communicating other measures are important but continue to base rewards on profits. 
B)  overstate the value of ending inventory in order to reduce cost of goods sold and improve operating income performance. 
C)  focus on long-term objectives and appropriate emphasis on profit. 
D)  analyze the product mix.

Question 18

The following information pertains to three different products being sold by Andy Company:  
- Which products have an elastic demand curve?

Accepted Answer

A)  Product A 
B)  Product B 
C)  Product C 
D)  all of these 
A)  Product A 
B)  Product B 
C)  Product C 
D)  all of these

Question 19

Which type of expenses does a monopoly usually incur that are different from the other types of market structures?

Accepted Answer

A)  marketing costs such as advertising, positioning, discounting, and coupons 
B)  costs of differentiation such as advertising, rebates, coupons 
C)  no special expenses 
D)  legal and lobbying expenditures 
A)  marketing costs such as advertising, positioning, discounting, and coupons 
B)  costs of differentiation such as advertising, rebates, coupons 
C)  no special expenses 
D)  legal and lobbying expenditures

Question 20

Answer the following:

Accepted Answer

@#IMG-DLM&_TB2043_00

___________ refers to charging different prices to different customers for essentially the same product.

_______________ is the pricing of a new product at a low initial price to build market share quickly.

Which of the following statements is FALSE?

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Which of the following markets is characterized by the following: only a few firms in the industry, a fairly unique product, difficult entry into the industry, and spending for differentiation of the product?

A successful firm

Monopolistic competition is best defined as

According to Hansen and Mowen, which of the following stages comes first?

The majority of the product cost is "locked in" during which of the following life-cycle stages?

An alternative to the limitation of focusing on profits would be

The following information pertains to three different products being sold by Andy Company: - Which products have an elastic demand curve?

Which type of expenses does a monopoly usually incur that are different from the other types of market structures?

Answer the following:

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

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

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Exam 18: Pricing and Profitability Analysis

___________ refers to charging different prices to different customers for essentially the same product.

_______________ is the pricing of a new product at a low initial price to build market share quickly.

Which of the following statements is FALSE?

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Which of the following markets is characterized by the following: only a few firms in the industry, a fairly unique product, difficult entry into the industry, and spending for differentiation of the product?

A successful firm

Monopolistic competition is best defined as

According to Hansen and Mowen, which of the following stages comes first?

The majority of the product cost is "locked in" during which of the following life-cycle stages?

An alternative to the limitation of focusing on profits would be

The following information pertains to three different products being sold by Andy Company: - Which products have an elastic demand curve?

Which type of expenses does a monopoly usually incur that are different from the other types of market structures?

Answer the following:

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

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