ACCT434 Advanced Cost Management Week 5 Pricing Decisions Management Control Systems (Version 1)

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 1)

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 first step in implementing target pricing and target costing is
choosing a target price.
determining a target cost.
developing a product that satisfies needs of potential customers.
performing value engineering.

3. (TCO 7) The markup percentage is usually higher if the cost base used is
the full cost of the product.
the variable cost of the product.
variable manufacturing costs.
total manufacturing costs.

4. (TCO 7) An understanding of life-cycle costs can lead to
additional costs during the manufacturing cycle.
less need for evaluation of the competition.
cost-effective product designs that are easier to service.
mutually beneficial relationships between buyers and sellers.

5. (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units?

6. (TCO 8) A product may be passed from one subunit to another subunit in the same organization. The product is known as
an interdepartmental product.
an intermediate product.
a subunit product.
a transfer product.

7. (TCO 8) Transfer prices should be judged by whether they promote
goal congruence.
the balanced scorecard method.
a high level of subunit autonomy in decision making.
Both 1 and 2 are correct.

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) An advantage of using budgeted costs for transfer pricing among divisions is that (Points : 3)
it promotes subunit autonomy.
the divisions know the transfer price in advance.
it usually provides a basis for optimal decision making.
overall corporate profitability is usually higher.

10. (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit. Outlay cost is $4. What is the opportunity cost, assuming the seller sells internally?
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