Cost-plus pricing ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
starts
with the product’s total costs and adds a desired profit to determine a
cost-plus price
·
YOU WERE SURE AND INCORRECT
is
the price a company strives to set for a product or service
·
has
little or no control over the prices of products or services
·
begins
with the market price of a product and subtracts the company’s desired profit
to determine the product’s target total cost
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Cost-plus
pricing starts with the product’s total costs and adds
a desired profit to determine a cost-plus price.
Target
costing begins with the market price of a product and subtracts the company’s
desired profit to determine the product’s target total cost.
Target
price is the price a company strives to set for a product or service.
Price takers have little or no control over the prices of their
products or services.
ANSWER
INCORRECT
·
contain NO allocation of common
fixed costs
·
YOU WERE SURE AND INCORRECT
refers to the result of
operating income or loss for each individual product line
·
include costs that may be
eliminated as a result of discontinuing the product
·
THE CORRECT ANSWER
include fixed costs that
continue to be incurred even if the product line is discontinued
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Unavoidable fixed costs include
fixed costs that continue to be incurred even if the product line is
discontinued.
Segment margin income statement
contains NO allocation of common fixed costs.
Segment margin income refers to
the result of operating income or loss for each individual product line.
Avoidable
fixed costs include costs that may be eliminated as a result of discontinuing
the product.
Page
Incorporated manufactures automotive parts that sell for $80 each. The manager
reported 280 defective parts in inventory, which cost $50 to reproduce. The
manager can sell the defective parts for $20 each, or process the parts further
for $30 each, and then sell them for the standard sales price.
Which
of the following should the managerial accountant recommend for action?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
Repair the defective parts for
an $8,400 net increase in operating income.
·
Sell the defective parts as is
for a $16,800 net decrease in operating income.
·
YOU WERE SURE AND INCORRECT
Sell the defective parts as is
for an $8,400 net decrease in operating income.
·
Repair the defective parts for
a $16,800 net increase in operating income.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The managerial accountant
should recommend for action of repairing the defective parts
for an $8,400 net increase in operating income.
A
sunk cost ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
include costs that have been
incurred in the past and cannot be changed
·
includes the purchase price of
a vehicle a manager may trade in at the end of the period
·
YOU WERE SURE AND INCORRECT
includes future costs
·
would NOT include an irrelevant
cost of decision making
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A
sunk cost includes costs that have been incurred in the past and cannot be
changed. The other answers are not correct.
Which
of the following is a TRUE concept about what a manager should consider when a
customer requests a one-time special order?
ANSWER
INCORRECT
·
The standard selling price
·
THE CORRECT ANSWER
Available capacity
·
YOU WERE SURE AND INCORRECT
Existing fixed costs should not
be considered.
·
Whether special prices exceed
normal variable costs.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A
manager considers available capacity when
a customer requests a one-time special order. Managers should consider the
incremental cost of filling the order (which includes both fixed and variable
components). They should not consider the regular selling price, but instead
whether the special order will affect regular sales in the long run.
Which of the following is TRUE
about constraints?
ANSWER
INCORRECT
·
A
constraint is referred to as the distribution of product sales.
·
THE CORRECT ANSWER
A
constraint limits assembly or sale of a product.
·
YOU WERE SURE AND INCORRECT
A
constraint is referred to as an expected future cost which may differ amongst
the alternatives.
·
A
manager may assemble the product using the least contribution margin per unit
as a constraint to increase organizational profits.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A constraint limits assembly or sale of a product is
a TRUE statement about a constraint. The other answers are not correct.
Mike’s
Auto Service reported information about the cost associated to sell as is or
process further. The managerial accountant expects to earn $200,000 of
revenue from selling parts as is.
State whether the managerial
accountant should “Process Further” or “Do Not Process” based on the Decision
Rule.
|
|
Sell As Is
|
Process Further
|
Differences:
Additional Revenue/(Costs) from Processing Further
|
|
Expected
revenue from selling parts
|
$200,000
|
|
|
|
Expected
revenue from selling processed parts
|
|
$250,000
|
$50,000
|
|
Additional
cost to remanufacture
|
|
($35,000)
|
($35,000)
|
|
Total
Net Benefit
|
$200,000
|
$215,000
|
$15,000
|
ANSWER
INCORRECT
·
Do not process further because
the sell as is cost is less than the process further cost.
·
THE CORRECT ANSWER
Process further because the
extra revenue from processing further is more than the extra cost of processing
further.
·
YOU WERE SURE AND INCORRECT
Do not process further because
the extra revenue from processing further is less than the sell as is cost.
·
Do not process further because
the extra revenue from processing further is less than extra cost of processing
further.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Process further because the extra revenue from processing further
is more than extra cost of processing further. The
other answers are not correct.
Which
of the following is NOT a potential drawback of outsourcing?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
Outsourcing can be a lower cost
alternative.
·
A manager who engages in
outsourcing loses control of the production process.
·
YOU WERE SURE AND INCORRECT
A manager who engages in
outsourcing loses control over quality and production scheduling.
·
A company must spend money to
hire more employees to manage the outsourcing process.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Outsourcing can be a lower cost alternative is
NOT a potential drawback of outsourcing. The other answers represent potential
drawbacks of outsourcing.
Page
Incorporated manufactures automotive parts that sell for $80 each. The manager
reported 280 defective parts in inventory, which cost $50 to reproduce. The
manager can sell the defective parts for $20 each, or process the parts further
for $30 each, and then sell them for the standard sales price.
Which
of the following should the managerial accountant recommend for action?
ANSWER
INCORRECT
·
Sell the defective parts as is
for an $8,400 net decrease in operating income.
·
THE CORRECT ANSWER
Repair the defective parts for
an $8,400 net increase in operating income.
·
YOU WERE SURE AND INCORRECT
Sell the defective parts as is
for a $16,800 net decrease in operating income.
·
Repair the defective parts for
a $16,800 net increase in operating income.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The managerial accountant
should recommend for action of repairing the defective parts
for an $8,400 net increase in operating income.
A
special order should be rejected when ________.
ANSWER
INCORRECT
·
variable nonmanufacturing
expenses result from the special order costs
·
THE CORRECT ANSWER
the price of the special order
is NOT more than variable costs of the order
·
YOU WERE SURE AND INCORRECT
the price of special order is
not more than the regular sales price
·
excess capacity is available
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A
special order should be rejected when the price
of the special order is NOT more than variable costs of the order.
The other answers are not correct.
Which
of the following is a TRUE concept about what a manager should consider when a
customer requests a one-time special order?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
Available capacity
·
Whether special prices exceed
normal variable costs.
·
YOU WERE SURE AND INCORRECT
The standard selling price
·
Existing fixed costs should not
be considered.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A
manager considers available capacity when
a customer requests a one-time special order. Managers should consider the
incremental cost of filling the order (which includes both fixed and variable
components). They should not consider the regular selling price, but instead
whether the special order will affect regular sales in the long run.
A
special order ________.
ANSWER
INCORRECT
·
occurs when a customer request
a one-time order but the manager increases the sales price
·
occurs when a customer requests
continuous orders at a reduction in the sales price
·
YOU WERE SURE AND INCORRECT
occurs when a customer requests
continuous orders at an increase in the sales price
·
THE CORRECT ANSWER
occurs when a customer requests
a one-time order at a reduction in the sales price
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A
special order occurs when a customer requests a one-time order at a reduction in
the sales price. The other answers are not correct.
Unavoidable
fixed costs ________.
ANSWER
INCORRECT
·
contain NO allocation of common
fixed costs
·
THE CORRECT ANSWER
include fixed costs that
continue to be incurred even if the product line is discontinued
·
YOU WERE SURE AND INCORRECT
include costs that may be
eliminated as a result of discontinuing the product
·
refers to the result of
operating income or loss for each individual product line
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Unavoidable fixed costs include
fixed costs that continue to be incurred even if the product line is
discontinued.
Segment margin income statement
contains NO allocation of common fixed costs.
Segment margin income refers to
the result of operating income or loss for each individual product line.
Avoidable
fixed costs include costs that may be eliminated as a result of discontinuing
the product.
Avoidable
fixed costs ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
include costs that may be
eliminated as a result of discontinuing the product
·
contain NO allocation of common
fixed costs on the statement
·
refers to the result of
operating income or loss for each individual product line
·
YOU WERE SURE AND INCORRECT
include fixed costs that
continue to be incurred even if the product line is discontinued
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Avoidable fixed costs include
costs that may be eliminated as a result of discontinuing the product.
A segment margin income
statement contains NO allocation of common fixed costs on the statement.
Segment margin income refers to
the result of operating income or loss for each individual product line.
Unavoidable
fixed costs include fixed costs that continue to be incurred even if the
product line is discontinued.
A
segment margin income statement ________.
ANSWER
INCORRECT
·
includes fixed costs that
continue to be incurred even if the product line is discontinued
·
includes costs that may be
eliminated as a result of discontinuing the product
·
YOU WERE SURE AND INCORRECT
refers to the result of
operating income or loss for each individual product line
·
THE CORRECT ANSWER
contains NO allocation of
common fixed costs on the statement
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A segment margin income
statement contains NO allocation of common fixed costs on the statement.
Segment margin income refers to
the result of operating income or loss for each individual product line.
Unavoidable fixed costs include
fixed costs that continue to be incurred even if the product line is
discontinued.
Avoidable
fixed costs include costs that may be eliminated as a result of discontinuing
the product.
No comments:
Post a Comment