1. Which of the following can influence a company's pricing decisions? A) Manufacturing costs. B) Competitors. C) Customer demand. D) Pricing laws. E) All of the above. 2. Which of the following is not a major influence on pricing decisions? A) Planning and control policies of the firm. B) Customer demand. C) Costs. D) Competitors. E) Political, legal, and image-related issues. 3. The curve that shows the relationship between the sales price and quantity sold is called the: A) marginal revenue curve. B) average cost curve. C) profit curve. D) demand curve. E) revenue curve. 4. The curve that shows the change in total revenue that accompanies a change in quantity sold is called the: A) marginal revenue curve. B) average cost curve. C) profit curve. D) demand curve. E) revenue curve. 5. If the volume sold reacts strongly to changes in price, demand: A) has no elasticity. B) has negative elasticity. C) is inelastic. D) is elastic. E) is unrealistic. 6. Which of the following statements regarding price elasticity is false? A) The concept of price elasticity is an extension of the economic pricing model. B) Demand is elastic if a price change has a large negative impact on sales volume. C) Demand is elastic if price changes have no impact on sales volume. D) Measuring price elasticity is an important objective of market research. E) Demand is relatively inelastic if price changes have little impact on sales quantity. 7. Prices are said to be inelastic under which of the following conditions? Price Change; Change in Sales Volume A) Increase; Sizable decrease B) Increase; Little impact C) Decrease; Sizable increase D) Decrease; Little impact E) Choices "B" and "D" are characteristic of inelastic prices. 8. I. The economic model is limited in use because a firm's demand curve is difficult to determine. II. The marginal revenue and marginal cost model is valid for all forms of market organization (perfect competition, oligopoly, and so forth). III. Cost accounting systems are not designed to measure the marginal changes in cost incurred as production and sales increase. Which of the above statements is (are) true? A) I only. B) III only. C) I and III. D) II and III. E) I, II, and III. 9. In a typical business, the firm's overall demand would be influenced by interactions of pricing policies and: A) the company's reputation. B) the quality of goods and services offered. C) competing goods and services. D) advertising and promotional campaigns. E) all of the above factors. 10. Consider the following statements about why prices are often based on product costs: I. Companies sell many products and services, and cost-based approaches provide a simple and direct pricing method. II. The cost of a product or service provides a lower limit or floor, below which price should not be set in the long run. III. Determining a company's demand and marginal revenue curves is difficult, costly, and time consuming. Which of the above statements is (are) true? A) I only. B) III only. C) I and III. D) II and III. E) I, II, and III. 11. Which of the following represents the cost-plus pricing formula? A) Price = cost + (markup percentage x cost). B) Price = cost + markup percentage. C) Price = markup percentage x cost. D) Price = cost markup percentage. E) Price = cost + (markup percentage + cost). 12. If a company uses a cost-plus approach to pricing, it will find: A) there are several different definitions of cost and the higher the cost, the higher the markup percentage. B) there are several different definitions of cost and the higher the cost, the lower the markup percentage. C) there is one definition of cost, and there is no relationship between cost and the markup percentage used. D) there is one definition of cost, and there is no markup percentage with the cost-plus approach. E) it is in violation of generally accepted accounting principles (GAAP). 13. Aussie Company uses cost-plus pricing and has calculated total variable manufacturing cost, total absorption manufacturing cost, and total cost for one of its products. Which of these costs would be the smallest? A) Total variable manufacturing cost. B) Total absorption manufacturing cost. C) Total cost. D) There is no difference between choices "B" and "C." E) More information is needed to correctly answer the question. 14. The following data pertain to Quigley Enterprises: Variable manufacturing cost $60; Variable selling and administrative cost 10; Applied fixed manufacturing cost 30; Allocated fixed selling and administrative cost 5. What price will the company charge if the firm uses cost-plus pricing based on total cost and a markup percentage of 60%? A) $63. B) $168. C) $175. D) $280. E) Some other amount. 15. The Razooks Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: Variable manufacturing cost $180; Applied fixed manufacturing cost 90; Variable selling and administrative cost 60; Allocated fixed selling and administrative cost 75. What price will the company charge if the firm uses cost-plus pricing based on absorption cost and a markup percentage of 120%? A) $420. B) $459. C) $594. D) $672. E) Some other amount. 16. If the target profit is $60,000 for a volume of 480 units, fixed costs are $168,000, and the variable cost per unit is $450, then the markup percentage on variable cost would be: A) 104.56%. B) 105.56%. C) 106.00%. D) 106.45%. E) some other amount. 17. Which of the following is (are) a key feature of target costing? A) The use of cross-functional teams. B) A focus on the customer. C) A focus on product design. D) A focus on process design. E) All of the above. 18. Which of the following management tools is a key component of target costing? A) Management simulation. B) Linear programming. C) Value engineering. D) Goal programming. E) Performance reporting systems. 19. With the time and material pricing method, the hourly time charge is typically set equal to: A) the hourly labor cost. B) the hourly labor cost + annual overhead. C) the hourly labor cost + an hourly overhead charge + an hourly charge to cover the profit margin. D) annual overhead + an hourly charge to cover the profit margin. E) the hourly labor cost + an hourly charge to cover the profit margin. 20. If a firm has excess capacity, which of the following is a sensible bidding strategy? A) Set a price to cover all costs. B) Base the bid on the incremental costs incurred because the job will contribute toward the company's profit. C) Base the bid solely on direct labor hours. D) Downplay the potential impact of competitors. E) Allocate common fixed costs to individual jobs before preparing the bid