Managerial Accounting Homework

Topics: Cost, Costs, Variable cost Pages: 89 (17071 words) Published: September 7, 2013

Cost Accounting, 14e, Global Edition (Horngren/Datar/Rajan)
Chapter 12 Pricing Decisions and Cost Management

Objective 12.1

1) Companies should only produce and sell units as long as:
A) there is customer demand for the product
B) the competition allows it
C) the revenue from an additional unit exceeds the cost of producing it D) there is a generous supply of low-cost direct materials
Answer: C
Diff: 2
Terms: target price
Objective: 1
AACSB: Ethical reasoning

2) Too high a price may:
A) deter a customer from purchasing a product
B) increase demand for the product
C) indicate supply is too plentiful
D) decrease a competitor's market share
Answer: A
Diff: 1
Terms: target price
Objective: 1
AACSB: Reflective thinking

3) Companies must always examine their pricing:
A) based on the supply of the product
B) based on the cost of producing the product
C) through the eyes of their customers
D) through the eyes of their competitors
Answer: C
Diff: 3
Terms: target price
Objective: 1
AACSB: Ethical reasoning

4) Competitors:
A) with alternative products can force a company to lower its prices B) can gain a competitive pricing advantage with knowledge of your costs and operating policies C) may span international borders

D) All of these answers are correct.
Answer: D
Diff: 2
Terms: target price
Objective: 1
AACSB: Reflective thinking

5) Fluctuations in exchange rates between different currencies can influence the: A) cost of products using foreign suppliers
B) pricing of alternative products offered by foreign competitors C) demand for products of foreign competitors
D) All of these answers are correct.
Answer: D
Diff: 2
Terms: target price
Objective: 1
AACSB: Multiculturalism and diversity

6) The cost of producing a product:
A) in highly competitive markets controls pricing
B) affects the willingness of a company to supply a product
C) for pricing decisions includes manufacturing costs, but not product design costs D) None of these answers are correct.
Answer: B
Diff: 3
Terms: cost incurrence
Objective: 1
AACSB: Reflective thinking

7) In a noncompetitive environment, the key factor affecting pricing decisions is the: A) customer's willingness to pay
B) price charged for alternative products
C) cost of producing and delivering the product
D) All of these answers are correct.
Answer: A
Diff: 3
Terms: target price
Objective: 1
AACSB: Reflective thinking

8) In a competitive market with differentiated products like cameras, the key factor(s) affecting pricing decisions is/are the: A) customer's willingness to pay
B) price charged for alternative products
C) cost of producing and delivering the product
D) All of these answers are correct.
Answer: D
Diff: 2
Terms: target price
Objective: 1
AACSB: Reflective thinking

9) Three major influences on pricing decisions are:
A) competition, costs, and customers
B) competition, demand, and production efficiency
C) continuous improvement, customer satisfaction, and supply D) variable costs, fixed costs, and mixed costs
Answer: A
Diff: 1
Terms: target price
Objective: 1
AACSB: Reflective thinking

10) Companies must always examine pricing decisions through the eyes of their customers. Answer: TRUE
Diff: 2
Terms: target price
Objective: 1
AACSB: Ethical reasoning

11) Companies that produce high quality products do NOT have to pay attention to the actions of their competitors. Answer: FALSE
Explanation: No business operates in a vacuum. Companies must always be aware of the actions of their competitors. Diff: 2
Terms: target price
Objective: 1
AACSB: Reflective thinking

12) Relevant costs for pricing decisions include manufacturing costs, but NOT costs from other value-chain functions. Answer: FALSE
Explanation: Relevant costs for pricing decisions include costs from all value-chain functions, from R&D to customer service. Diff: 2...
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