Question 1 10 Points When there is excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price when: A incremental revenues exceed incremental costs. B additional fixed costs must be incurred to accommodate the order. C the company placing the order is in the same market segment as your current customers. D it never makes sense. Question 2 10 Points If a management accountant is trying to decide whether a cost is relevant to a decision, he or she should consider the cost relevant if: A) it is a historical cost precise in nature. B it is a historical cost that is the same among all alternatives. it is an expected future cost that is the same for each alternative. D it is an expected future cost that is different for each alternative. Question 3 10 Points Opportunity cost is best defined as: A the amount of money that is paid for something. B the amount of money that is paid for something, considering inflation. C the highest valued benefit given up in making a choice. all of the benefits that are given up in making a choice. Question 4 10 Points Relevant information has all of these characteristics EXCEPT: past costs are irrelevant A all future revenues and expenses are relevant. B different alternatives can be compared by examining differences in total revenue and expenses. qualitative factors should be considered. None of the above Question 5 10 Points The book value of an asset such as equipment is an example of: A a future cost. B a differential cost. an opportunity cost. a sunk cost. Question 6 10 Points Which of the following is explains the cost-plus approach to pricing decisions? A arriving at a price for the product based on the competitive pricing prevalent in the market. B arriving at a price based on the perceived value to a customer given the cost of design and added features. arriving at a price based on the demand and supply trends in the market. Darriving at a price that earns a specific return given the cost of the product. Question 7 10 Points In relation to target costing, which of the following best describes target cost per unit? A It is the targeted cost of producing one unit to achieve the current year's budgeted profit. B It is the estimated long-run cost of a product that enables the company to achieve its target operating income. It is the cost that can be achieved by ensuring that the company produced its products at maximum efficiency. It is the budgeted cost that the company estimates in producing a unit in the current budget period. Question 8 10 Points Which of the following scenarios is an example of predatory pricing? A Ceramic Corp sells its products below average total costs during off-peak seasons. B Almeda flowers has arrived at an informal agreement with other sellers in the area to charge a very high selling price. Anton Inc., sells its products for $25 in the U.S, however it can sell the same product for double the price in its home country. D Duyen Inc., is launching a new product and has decided to sell its product below its average variable costs until it drives competitors out of market. Which of the following best describes reverse engineering? A It refers to the process of disassembling and analyzing competitor's product. B It refers to the process of first setting the target cost and then designing the product. C It refers to the process of manufacturing and designing a product after analyzing the other products of the firm. D It refers to the process of studying customer feedback and then designing a product to match customer requirements. Question 10 10 Points Which of the following is a disadvantage of using target costing? A It may lead to an increase in all the non-value added cost of the product ( It may lead to a product being in development stage for a long time as the team repeatedly evaluates alternative designs. It may lead to increased employee participation in the cost reduction process of the organization thereby making it impossible to co-ordinate the process. Dit eliminates creativity in the manufacturing process as the focus is always on cost reduction and cost elimination. Question 11 10 Points Super Lighting manufactures small flashlights and is considering raising the price by 50 cents a unit for the coming year. With a 50- cent price increase, demand is expected to fall by 6,000 units. Currently Demand 40,000 units Selling price $4.50 Incremental cost per unit $3.00 If the price increase is implemented, operating profit is projected to: Projected 34,000 units $5.00 $3.00 A increase by $8,000. B decrease by $8,000. Cincrease by $12,000. decrease by $9,000. Which of the following is not a correct use of the term opportunity cost? A Opportunity costs are considered period costs rather than inventoriable costs for accounting purposes. B Opportunity costs must be considered by managers when making decisions. Opportunity cost plus the incremental future revenues and costs equal the relevant revenues and costs of any alternative when capacity is constrained. D The opportunity cost of holding inventory is the income forgone by tying up money in inventory and not investing it elsewhere. Question 13 10 Points Castilla manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $180 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Castilla's policy to add a 50% markup to full costs. Castilla is invited to bid on a one-time-only special order to supply 100 rustic tables. What is the lowest price Castilla should bid on this special order? A $12,600. B $14,400. C $18,000. D $23,000
