1) To reduce the cost to deliver a product or service to consumers, a company must focus on

a. operational efficiency.

b. location.

c. sales mix.

d. competition.

2) Cost-plus pricing adds an amount to the cost of the product or service to cover the company's operating costs and contribute to its profit.

True or False.

3) While customers and cost influence prices, so does

a. contribution margin.

b. fixed versus variable costs.

c. competition.

d. desired profit.

4) A difference in cost-plus pricing and target costing is that

a. target costing is generally determined after introducing a product and cost-plus pricing is determined before introducing a product.

b. target costing is a simple approach while cost-plus pricing is relatively complex.

c. target costing starts with the price customers are willing to pay whereas cost-plus pricing starts with the cost.

d. target costing computes the desired markup while cost-plus pricing computes the maximum cost the company is willing to incur.

5) Companies must engage in target costing after introducing a new product.

True or False.