Question 4

Marty works for a company that produces smartwatches. The latest model is called the GEN5 and Marty has been tasked with setting the price for it. From the following list, which criteria should Marty NOT consider when setting the price?

A.The target profit for the GEN5 product line.

B.How much customers would be willing to pay for each GEN5 smartwatch.

C.The capability of the company to meet throughput demands for the product.

D.Whether the product is a price-setter or a price-taker.

E.All of the above are considerations Marty should make.

2)TAGHeuer is a luxury watch maker that relies heavily on a participatory budgeting process to plan for future accounting periods. Which of the following would NOT be considered a benefit forTAGHeuerwhen using participatory budgeting?

Managers can intentionally build slack into their budgets for their area of operation,ensuring budget compliance.

The budget provides a benchmark for comparingestimated with actual results forevaluating manager performance.

The budget will better motivate employees to achieve sales growth and cost reduction goals.

Lower-level managers have detailed knowledge that helps create realistic budgets.

All of the above are benefits of using a participatory budgeting process atTAGHeuer.

3)Which of the following statements is true about the budgeting process?

A.Budgets are required for external accounting reporting and must follow IFRS accounting formatting standards.

B.Budgets are primarily used for planning, but not for control.

C.Budgets are created prior to the start of an accounting period by management, front line employees are not asked to provide input.

D.Budgeting is perhaps the most widely used management tool employed by private companies, but are generally not used much by governments.

E.New budgets can be based on a company's prior year's figures, or be started from zero.