1. The target cost of a product

a. includes product costs but not period costs.

b. is determined before the target price is established.

c. is the difference between the target price and the desired profit.

d. is determined by the target audience.

2. In the cost-plus pricing approach, the markup percentage is computed by dividing the

a. desired ROI/unit by variable cost/unit.

b. desired ROI/unit by total unit cost.

c. total unit cost by desired ROI/unit.

d. selling price/unit by desired ROI/unit. 3. All of the following are steps in the time-and-material pricing approach except calculating the

a. labor charge. b. material loading charge.

c. manufacturing overhead charge.

d. charges for a particular job.

4. The total contribution margin to a company in the market-based transfer price approach is

a. greater than in the cost-based approach.

b. less than in the cost-based approach.

c. the same as in the cost-based approach. d. either greater than or less than in the cost-based approach.

5. Absorption-cost pricing

a. includes all variable costs in the cost base.

b. excludes fixed manufacturing overhead from the cost base.

c. provides the data needed for pricing special orders.

d. uses a markup percentage that covers the desired ROI and the selling and administrative expenses.