Question 1

Price skimming is when:

Accepted Answer

A)  the initial product price is set low and is kept constant. 
B)  the initial product price is set high giving high short-term profits;then the price is slowly lowered. 
C)  the initial high product price is set high and raised. 
D)  the initial product price is set low and raised. 
A)  the initial product price is set low and is kept constant. 
B)  the initial product price is set high giving high short-term profits;then the price is slowly lowered. 
C)  the initial high product price is set high and raised. 
D)  the initial product price is set low and raised. B

Question 2

Silco Pty Ltd manufactures various lines of computer equipment.They are planning to introduce a line of laptop computers in January 2008.Current plans call for the production and sale of 1000 computers with estimated production costs as follows.The average amount of capital invested in the laptop computer line is $900 000 and Silco's target return on investment for the line is 18 per cent.What is the mark-up percentage if the company uses cost-plus pricing based on full cost?

Accepted Answer

A)  116.7% 
B)  15.7% 
C)  121.6% 
D)  58.9% 
A)  116.7% 
B)  15.7% 
C)  121.6% 
D)  58.9% B

Question 3

The Mixed-Up Floor Company Ltd makes two products,carpet polish and floor deodoriser.Operating information from the previous year is as follows.Fixed costs of $20 000 per year are presently allocated evenly between both products.If the product mix were to change,total fixed costs would remain the same.Calculate the contribution margin per machine hour for floor deodoriser.

Accepted Answer

A)  $4.00 
B)  $2.00 
C)  $3.00 
D)  $0.25 
A)  $4.00 
B)  $2.00 
C)  $3.00 
D)  $0.25 A

Question 4

Cost-plus pricing formulas can only be used with full cost models.

Accepted Answer

A) True 
 B)False

Question 5

Contribution margin per machine hour can be calculated by dividing:

Accepted Answer

A)  machine hours required per unit by sales margin per unit 
B)  contribution margin per unit by machine hours required per unit 
C)  total contribution margin per unit by total sales revenue per unit 
D)  total machine hours required by total contribution margin 
A)  machine hours required per unit by sales margin per unit 
B)  contribution margin per unit by machine hours required per unit 
C)  total contribution margin per unit by total sales revenue per unit 
D)  total machine hours required by total contribution margin

Question 6

Silco Pty Ltd manufactures various lines of computer equipment.They are planning to introduce a line of laptop computers in January 2008.Current plans call for the production and sale of 1000 computers with estimated production costs as follows.The average amount of capital invested in the laptop computer line is $900 000 and Silco's target return on investment for the line is 18 per cent.What price must Silco charge if the company uses cost-plus pricing based on full cost?

Accepted Answer

A)  $868 
B)  $900 
C)  $1 192 
D)  $1 930 
A)  $868 
B)  $900 
C)  $1 192 
D)  $1 930

Question 7

Which of the following statements about time and material pricing is/are true?
i.The labour charge includes the direct cost of the employee's time
ii.The labour charge includes a charge to cover various overhead costs.
iii.The labour charge includes a handling charge for material.

Accepted Answer

A)  i 
B)  i and ii 
C)  i and iii 
D)  All of the given answers 
A)  i 
B)  i and ii 
C)  i and iii 
D)  All of the given answers

Question 8

Tots N Style Pty Ltd has the following data concerning a decorator playpen it manufactures:
If the company uses cost-plus pricing based on variable manufacturing costs,determine the mark-up percentage used by the company to obtain a price of $105.

Accepted Answer

A)  350% 
B)  300% 
C)  250% 
D)  200% 
A)  350% 
B)  300% 
C)  250% 
D)  200%

Question 9

Which of the following represents the cost-based pricing formula?

Accepted Answer

A)  Price = cost + (mark-up % × cost) 
B)  Price = cost + mark-up % 
C)  Price = mark-up % × cost 
D)  Price = cost + (mark-up % + cost) 
A)  Price = cost + (mark-up % × cost) 
B)  Price = cost + mark-up % 
C)  Price = mark-up % × cost 
D)  Price = cost + (mark-up % + cost)

Question 10

The marginal revenue - marginal cost paradigm,is valid for all forms of economic market including the oligopolistic market.

Accepted Answer

A) True 
 B)False

Question 11

The Houston Company manufactures office equipment.They are ready to introduce a new line of desktop copiers.The following data concerns the copiers:
If the company uses cost-plus pricing based on total variable cost,what price must the company charge when the mark-up percentage is 150 per cent?

Accepted Answer

A)  $360 
B)  $525 
C)  $600 
D)  $495 
A)  $360 
B)  $525 
C)  $600 
D)  $495

Question 12

Avocado Ltd produces small electronic components for kitchen appliances.Two of its products are Component Y and Component Z.The selling price of Component Y is $15,and the selling price of Component Z is $20.The variable cost per unit for Component Y is $8 and the variable cost per unit of Component Z is $11.The machine hour requirement and demand for the two products are:
Avocado Ltd's production capacity is 6500 machine hours per month.The optimal product mix is:

Accepted Answer

A)  1000 units X,1500 units Y 
B)  0 units X,2167 units Y 
C)  1000 units X,2500 units Y 
D)  1500 units X,1000 units Y 
A)  1000 units X,1500 units Y 
B)  0 units X,2167 units Y 
C)  1000 units X,2500 units Y 
D)  1500 units X,1000 units Y

Question 13

The optimal decision in the linear programming model depends on:

Accepted Answer

A)  the intersection of the constraint lines 
B)  the slope of the objective function 
C)  the slope of the objective function combined with all constraints 
D)  the feasible region interact with the smallest constraint 
A)  the intersection of the constraint lines 
B)  the slope of the objective function 
C)  the slope of the objective function combined with all constraints 
D)  the feasible region interact with the smallest constraint

Question 14

Capacity has no real impact on bids submitted by firms in a competitive bidding scenario.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements about time and material pricing is/are true?
i.The material charge includes the direct cost of the employee's time
ii.The material charge includes the direct cost of materials used.
iii.The material charge includes a charge for material handling and storage.

Accepted Answer

A)  ii 
B)  iii 
C)  ii and iii 
D)  All of the given answers 
A)  ii 
B)  iii 
C)  ii and iii 
D)  All of the given answers

Question 16

Value-based pricing refers to:

Accepted Answer

A)  A pricing strategy that takes into account the costs and benefits experienced by the customer that extend beyond the initial purchase price 
B)  A pricing strategy where customers' perceptions of value guide the price 
C)  A pricing strategy where prices are determined based on net value of each component of a product or service 
D)  A pricing strategy based on a labour and material pricing formula 
A)  A pricing strategy that takes into account the costs and benefits experienced by the customer that extend beyond the initial purchase price 
B)  A pricing strategy where customers' perceptions of value guide the price 
C)  A pricing strategy where prices are determined based on net value of each component of a product or service 
D)  A pricing strategy based on a labour and material pricing formula

Question 17

Linear programming is used by decision makers when there are:

Accepted Answer

A)  limited resources for labour 
B)  scarce resources for machine hours 
C)  scarce resources for both labour and machine hours 
D)  multiple scarce resources 
A)  limited resources for labour 
B)  scarce resources for machine hours 
C)  scarce resources for both labour and machine hours 
D)  multiple scarce resources

Question 18

Which of the following is not an issue when making a pricing decision?

Accepted Answer

A)  Legal issues like collusion and price discrimination. 
B)  Political considerations 
C)  Environmental regulations 
D)  Competition 
A)  Legal issues like collusion and price discrimination. 
B)  Political considerations 
C)  Environmental regulations 
D)  Competition

Question 19

It is illegal for companies to offer different prices to different customers for the same goods or services,except:

Accepted Answer

A)  where the company is trying to meet a competitor's price 
B)  where the company's corporate vision explicitly states this is a company policy 
C)  where the company is pursuing a cost leadership strategy 
D)  There is no exception: price discrimination is always illegal. 
A)  where the company is trying to meet a competitor's price 
B)  where the company's corporate vision explicitly states this is a company policy 
C)  where the company is pursuing a cost leadership strategy 
D)  There is no exception: price discrimination is always illegal.

Question 20

A firm produces products X,Y and Z with contribution margins of $4,$5 and $10 respectively.The firm has only 5000 machine hours available for a particular period.Machine hours required for each of the products are 1,1 and 5 hours respectively.Demand for the products is 1000 for X,3000 for Y and 2000 for Z.How many units of each product will the firm produce?

Accepted Answer

A)  2000 Z 
B)  1000 X,3000 Y,2000 Z 
C)  3000 Y,1000 X,200 Z 
D)  2000 Z,3000 Y 
A)  2000 Z 
B)  1000 X,3000 Y,2000 Z 
C)  3000 Y,1000 X,200 Z 
D)  2000 Z,3000 Y

Price skimming is when:

Cost-plus pricing formulas can only be used with full cost models.

Contribution margin per machine hour can be calculated by dividing:

Which of the following statements about time and material pricing is/are true? i.The labour charge includes the direct cost of the employee's time ii.The labour charge includes a charge to cover various overhead costs. iii.The labour charge includes a handling charge for material.

Tots N Style Pty Ltd has the following data concerning a decorator playpen it manufactures: If the company uses cost-plus pricing based on variable manufacturing costs,determine the mark-up percentage used by the company to obtain a price of $105.

Which of the following represents the cost-based pricing formula?

The marginal revenue - marginal cost paradigm,is valid for all forms of economic market including the oligopolistic market.

The Houston Company manufactures office equipment.They are ready to introduce a new line of desktop copiers.The following data concerns the copiers: If the company uses cost-plus pricing based on total variable cost,what price must the company charge when the mark-up percentage is 150 per cent?

The optimal decision in the linear programming model depends on:

Capacity has no real impact on bids submitted by firms in a competitive bidding scenario.

Which of the following statements about time and material pricing is/are true? i.The material charge includes the direct cost of the employee's time ii.The material charge includes the direct cost of materials used. iii.The material charge includes a charge for material handling and storage.

Value-based pricing refers to:

Linear programming is used by decision makers when there are:

Which of the following is not an issue when making a pricing decision?

It is illegal for companies to offer different prices to different customers for the same goods or services,except:

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Information for Capital Expenditure Decisions

Filters

Exam 20: Pricing and Product Mix Decisions

Price skimming is when:

Cost-plus pricing formulas can only be used with full cost models.

Contribution margin per machine hour can be calculated by dividing:

Which of the following statements about time and material pricing is/are true? i.The labour charge includes the direct cost of the employee's time ii.The labour charge includes a charge to cover various overhead costs. iii.The labour charge includes a handling charge for material.

Tots N Style Pty Ltd has the following data concerning a decorator playpen it manufactures: If the company uses cost-plus pricing based on variable manufacturing costs,determine the mark-up percentage used by the company to obtain a price of $105.

Which of the following represents the cost-based pricing formula?

The marginal revenue - marginal cost paradigm,is valid for all forms of economic market including the oligopolistic market.

The Houston Company manufactures office equipment.They are ready to introduce a new line of desktop copiers.The following data concerns the copiers: If the company uses cost-plus pricing based on total variable cost,what price must the company charge when the mark-up percentage is 150 per cent?

The optimal decision in the linear programming model depends on:

Capacity has no real impact on bids submitted by firms in a competitive bidding scenario.

Which of the following statements about time and material pricing is/are true? i.The material charge includes the direct cost of the employee's time ii.The material charge includes the direct cost of materials used. iii.The material charge includes a charge for material handling and storage.

Value-based pricing refers to:

Linear programming is used by decision makers when there are:

Which of the following is not an issue when making a pricing decision?

It is illegal for companies to offer different prices to different customers for the same goods or services,except:

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Information for Capital Expenditure Decisions

Filters