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25 Cards in this Set
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39) Which would be a consideration for making specialorders?A) Available capacity to fill the orderB) If price will cover incremental costs of filling theorderC) If the order will affect regular sales in the long runD) All of the above |
Answer: D |
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63) Indicate whether each item below is a characteristic ofa price-taker or a price-setter. Use PT for price-taker and PS forprice-setter.a) Cost-pluspricingb) Productlacks uniquenessc) Lesscompetitiond) Targetpricinge) Heavycompetition |
Answer: a) PSb) PTc) PSd) PTe) PT |
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87) Which of the following best describes "targetcosting"?A) An approach to pricing that begins with revenue atmarket price and subtracts desired profit to arrive at target total costB) A factor that restricts production or sales of a productC) All costs incurred along the value chain in connectionwith the product or serviceD) An approach to pricing that begins with the product'stotal cost and adds desired profit |
Answer: A |
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89) Which of the following describes the products andservices of companies that are price-setters?A) They tend to be unique.B) They are priced by managers using a target-costingemphasis.C) They tend to have a lot of competitors.D) They tend to be commodities. |
Answer: A |
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91) The cost-plus price is described by which of thefollowing?A) Target total cost plus desired profitB) Total cost plus desired profitC) Revenue at market price plus desired profitD) Variable cost plus desired profit |
Answer: B |
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100) All of the following factors affect the amount acustomer is willing to pay for a product, exceptA) the selling company's costs.B) the competition's price. C) the product's uniqueness.D) general economic conditions. |
Answer: A |
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119) Common fixed costs that are allocated betweendepartments are generallyA) direct fixed costs of the department.B) relevant to the decision of whether to discontinue thedepartment.C) irrelevant to the decision of whether to discontinue thedepartment.D) direct fixed costs of other departments. |
Answer: C |
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121) A company's manager would consider which of thefollowing in deciding whether to discontinue its electronics product line?A) The costs it could save by discontinuing the productlineB) The revenues it would lose from discontinuing theproduct lineC) How discontinuing the electronics product line wouldaffect sales of its other products (like CDs)D) All of the above |
Answer: D |
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125) Each month, Burrel Incorporated produces 500 units of a product that has unit variable costs of $17.00. Total fixed costs for the month are $4,375. A special sales order is received for 200 units of the product at a price of $20 per unit. In deciding to accept or reject the special sales order, it is appropriate to consider the A) new fixed cost per unit of $6.25. B) current fixed cost per unit of $8.75. C) difference between the offered price and the variable cost per unit. D) difference between the two fixed costs per unit, or $2.50. |
Answer: C |
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169) The factor that restricts production or sale of aproduct is which of the following?A) Demanding factor B) ConstraintC) Sunk factorD) Relevant factor |
Answer: B |
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172) Which of the following could be a constraint forselling a product?A) Store hoursB) Available labor hours for employeesC) Shelf spaceD) All of the above could be constraints. |
Answer: D |
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174) Changing the product mix emphasis in the short runwill usually not affectA) total variable costs.B) both total variable and total fixed costs.C) total fixed costs.D) total contribution margin. |
Answer: C |
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210) Managers should consider which of the following whendeciding whether to outsource a product or service?A) Quality of the product or serviceB) Delivery schedule of the product or serviceC) Cost charged for the product or serviceD) All of the above |
Answer: D |
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242) Bear Country Granola is considering selling premiumgranola. It already sells regular for $6.75/pound and would sell premiumgranola for $9.50/pound. The cost for organic grains for the premium granolawould be $1.15/pound. A cost that would not be considered in thisdecision would beA) the extra revenue generated by selling premium.B) the cost of refining the regular granola.C) the cost of further processing the regular granola intopremium granola.D) any of the abovewould be considered |
Answer: B |
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245) Zach has the following information to evaluate—hiscurrent salary of $75,000 versus total revenues of $100,000 and expenses of$67,000 from starting a new business. How much is the opportunity costassociated with staying at his current job?A) $75,000B) $(8,000)C) $33,000D) $167,000 |
Answer: C
Explanation: C) Revenues $100,000 Expenses 67,000 Potential income $33,000 |
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251) Longview Baskets has in its inventory 2,000 damagedbaskets that cost $20,000. The baskets can be sold in their present conditionfor $12,000, or repaired at a cost of $13,000 and sold for $35,000. What is theopportunity cost of selling the baskets in their present condition?A) $32,000B) $25,000C) $48,000 D) $22,000 |
Answer: D |
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253) Jackie has the following information to evaluate—hercurrent salary of $74,000 versus total revenues of $100,000 and expenses of$65,000 from starting a new business. How much is the opportunity costassociated with staying at her current job?A) $35,000B) $165,000C) $74,000D) $(9,000) |
Answer: A |
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252) Molly has the following information to evaluate—hercurrent salary of $57,000 versus total revenues of $62,000 and expenses of$47,000 from starting a new business. How much is the opportunity costassociated with starting the new business?A) $62,000B) $15,000C) $57,000D) $47,000 |
Answer: C |
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238) The benefit foregone by choosing a particular alternative course of action is referred to as a(n) A) sunk cost. B) opportunity cost. C) variable cost. D) incremental cost. |
Answer: B |
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237) When the extra revenue from processing further is lessthan the extra cost of processing further, the best decision would be toA) process further.B) develop a new product.C) not process further.D) start over. |
Answer: C |
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208) All of the following are outsourcing considerations, except A) Are any fixed costs avoidable if we outsource? B) How do our fixed costs compare to the outsourcing cost? C) What could we do with the freed capacity? D) How do our variable costs compare to the outsourcing cost? |
Answer: B |
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167) The contribution margin per unit of constraint iscalculated asA) contribution margin per unit × constraint per unit.B) contribution margin per unit × units per constraint.C) contribution margin per unit ÷ units per constraint.D) contribution margin per unit + constraint per unit. |
Answer: B |
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119) Common fixed costs that are allocated betweendepartments are generallyA) direct fixed costs of the department.B) relevant to the decision of whether to discontinue thedepartment.C) irrelevant to the decision of whether to discontinue thedepartment.D) direct fixed costs of other departments. |
Answer: C |
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118) Unavoidable fixed costs areA) irrelevant to the decision of whether to discontinue aproduct line because they will differ between alternatives.B) relevant to the decision of whether to discontinue thedepartment.C) irrelevant to the decision of whether to discontinue aproduct line because they will not differ between alternatives.D) none of the above. |
Answer: C |
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95) Which of the following pairs are characteristics ofprice-setters?A) Less competition and target costingB) Cost-plus pricing and less competitionC) Lack of product uniqueness and heavy competition D) Less competition and lack of product uniqueness |
Answer: B |
