ACCT434 Advanced Cost Management: Week 5 Pricing Decisions Management Control Systems (Version 2)

Reminder: There are several versions of this week’s questions, please make sure you have reviewed and compared our questions with your questions.

ACCT434 Advanced Cost Management
Week 5 Pricing Decisions Management Control Systems (Version 2)

1. (TCO 7) Major influences of competitors, costs, and customers on pricing decisions are factors of (Points : 3)
supply and demand.
activity-based costing and activity-based management.
key management themes that are important to managers attaining success in their planning and control decisions.
the value-chain concept.

2. (TCO 7) The best opportunity for cost reduction is (Points : 3)
during the manufacturing phase of the value chain.
during the product-process design phase of the value chain.
during the marketing phase of the value chain.
during the distribution phase of the value chain.

3. (TCO 7) A product's markup percentage needs to cover operating profits when the cost base is (Points : 3)
variable manufacturing costs.
the full cost of the product.
the variable cost of the product.
All of the above

4. (TCO 7) Life-cycle costing is the name given to (Points : 3)
a method of cost planning to reduce manufacturing costs to targeted levels.
the process of examining each component of a product to determine whether its cost can be reduced.
the process of managing all costs along the value chain.
a system that focuses on reducing costs during the manufacturing cycle.

5. (TCO 7) Each month, Haddon Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddon's monthly sales are $500,000.

The markup percentage on full cost to arrive at the target (existing) selling price is
(Points : 3)
25%.
75%.
80%.
20%.

6. (TCO 8) The benefits of a decentralized organization are greater when a company (Points : 3)
is large and unregulated.
is facing great uncertainties in their environment.
has few interdependencies among division.
All of the above

7. (TCO 8) A transfer-pricing method leads to goal congruence when managers (Points : 3)
always act in their own best interest.
act in their own best interest and the decision is in the long-term best interest of the manager's subunit.
act in their own best interest and the decision is in the long-term best interest of the company.
act in their own best interest and the decision is in the short-term best interest of the company.

8. (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called (Points : 3)
distress prices.
dropped prices.
low-average prices.
substitute prices.

9. (TCO 8) The range over which two divisions will negotiate a transfer price is (Points : 3)
between the supplying division's variable cost and the market price of the product.
between the supplying division's variable cost and its full cost of the product.
anywhere above the supplying division's full cost of the product.
between the supplying division's full cost and 180% above its full cost.

10. (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound.
Which of the following formulas correctly reflects the company's operating income per pound? (Points : 3)
$5.00 - ($1.25 + $2.50) = $1.25
$5.00 - ($0.75 + $2.50) = $1.75
$5.00 - ($0.75 + $3.75) = $0.50
$5.00 - ($0.25 + $1.25 + $3.50) = 0
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