Question 1

The charging of different prices to different customers for essentially the same product is called:

Accepted Answer

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

Question 2

Dumping in the international market is a form of:

Accepted Answer

A)  Price discrimination 
B)  Price skimming 
C)  Predatory pricing 
D)  Penetration pricing

Question 3

The stage where revenues always decrease is the stage.

Accepted Answer

The answer of The stage where revenues always decrease is...

Question 4

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2016, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales price variance?

Accepted Answer

A)  $18,000 (F) 
B)  $20,000 (U) 
C)  $8,000 (U) 
D)  $2,000 (U)

Question 5

Deep Pit Mining mines three products. Gold ore sells for $1,000 per ton, variable costs are $600 per ton, and fixed mining costs are $250,000. The segment margin for 2016 was $(100,000). The management of Deep Pit Mining was considering dropping the mining of gold ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. What were the sales (in tons) for 2016?

Accepted Answer

A)  1,000 tons 
B)  375 tons 
C)  250 tons 
D)  200 tons

Question 6

Hang 10 Inc. produces two types of surfboards: basic and deluxe. The basic surfboard sells for $25 and the deluxe sells for $100. Hang 10 is budgeting sales for 2016 of 1,000 basic surfboards and 650 deluxe. Variable costs associated with the basic surfboard amount to $10 and $40 for the deluxe. Actual units sold were 1,200 basic and 550 deluxe.
Required:
a. Calculate the contribution margin variance
b. Calculate the sales mix variance

Accepted Answer

The answer of Hang 10 Inc. produces two types of...

Question 7

The variance that compares actual volume with expected volume multiplied by expected price is the __________ variance.

Accepted Answer

The answer of The variance that compares actual volume with...

Question 8

Which of the following is NOT an example of a market structure?

Accepted Answer

A)  oligopoly 
B)  monopoly 
C)  barrier market 
D)  perfectly competitive

Question 9

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

Question 10

Corlis Construction Company builds houses. Each job requires a bid. Corlis' bidding policy is to estimate the costs of materials, direct labor, and subcontractor's costs. These are totaled and a markup is applied to cover overhead and profit. In the coming year, Corlis believes it will be the successful bidder on ten jobs with the following total revenues and costs:
  The residual will cover overhead and profits.
Required: 
a. What is the markup percentage on total direct costs?
b. Suppose Corlis is asked to bid on a job with estimated direct costs of $57,500. What is the bid? If the customer complains that the profit seems pretty high, how might Corlis counter that?

Accepted Answer

The answer of Corlis Construction Company builds houses. Each job...

Question 11

Profits are measured to determine the viability of a firm and its adherence to government regulations, to measure managerial performance, and to signal the market to encourage stockholders.

Accepted Answer

A) True 
 B)False

Question 12

When a higher price is charged at the beginning of a product's life cycle it is called:

Accepted Answer

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

Question 13

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.

Accepted Answer

The answer of Consider the following portion of a segmented...

Question 14

Price elasticity of demand is the percent change in price demanded for a given percent change in quantity.

Accepted Answer

A) True 
 B)False

Question 15

The variance is the difference between actual and budgeted contribution margin.

Accepted Answer

The answer of The variance is the difference between actual...

Question 16

Unlike absorption costing, variable costing only assigns unit-level manufacturing costs to a product.

Accepted Answer

A) True 
 B)False

Question 17

Price skimming occurs in which of the following life-cycle stages?

Accepted Answer

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

Question 18

Sarandon Company has the following information pertaining to its two divisions for 2016:

Accepted Answer

The answer of Sarandon Company has the following information pertaining...

Question 19

Profit-related variances focus on the difference between budgeted and actual prices, volumes, and contribution margin.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 18: Pricing and Profitability Analysis

The charging of different prices to different customers for essentially the same product is called:

Dumping in the international market is a form of:

The stage where revenues always decrease is the stage.

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2016, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales price variance?

The variance that compares actual volume with expected volume multiplied by expected price is the __________ variance.

Which of the following is NOT an example of a market structure?

What is the primary difference between variable and absorption costing?

Profits are measured to determine the viability of a firm and its adherence to government regulations, to measure managerial performance, and to signal the market to encourage stockholders.

When a higher price is charged at the beginning of a product's life cycle it is called:

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.

Price elasticity of demand is the percent change in price demanded for a given percent change in quantity.

The variance is the difference between actual and budgeted contribution margin.

Unlike absorption costing, variable costing only assigns unit-level manufacturing costs to a product.

Price skimming occurs in which of the following life-cycle stages?

Sarandon Company has the following information pertaining to its two divisions for 2016:

Profit-related variances focus on the difference between budgeted and actual prices, volumes, and contribution margin.

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