The selling price of Product X is set at $550 for each unit and sales for the coming year are expected to be 800 units.

A return of 30% on the investment of $500,000 in Product X will be required in the coming year.

1) What is the target cost for each unit of Product X?

A. $38500 B. $16500 C. $18750 D. $36250

2. Which of the following statements describes target costing?

A. It calculates the expected cost of a product and then adds a margin to it to arrive at the target selling price B. It allocates overhead costs to products by collecting the costs into pools and sharing them out according to each products usage of the cost driving activity C. It identifies the market price of a product and then subtracts a desired profit margin to arrive at the target cost D. It identifies different markets for a product and then sells that same product at different prices in each market

The following are all steps in the implementation of the target costing process for a product:

(1) Calculate the target cost (2) Calculate the estimated current cost based on the existing product specification (3) Set the required profit

(4) Set the selling price (5) Calculate the target cost gap

Which of the following represents the correct sequence if target costing were to be used?

A. (1), (2), (3), (4), (5) B. (2), (3), (4), (1), (5) C. (4), (3), (1), (2), (5) D. (4), (5), (3), (1), (2)

4. The selling price of a product has been set at $450.00 per unit, and at that price, the company expect to sell 1,000 units per month. The required profit margin is 20% of sales, and the expected production cost is $400.00 per unit. What is the target gap?

a) $30

b) $35

c) $40

d) $25

5. The selling price of a product has been set at $300.00 per unit, and at that price, the company expect to sell 1000 units per year. The company requires a return of 20% p.a on its investment of $1,250,000 in the product. What is the target cost per unit?

a) $50

b) $250.00

c) $300.00

d) $60.00

6. The selling price of a product has been set at $600 per unit, and that price the company expects to sell 5,000 units a month. The required mark- up is 20%% of cost, and the expected production cost is $520 per unit. What is the target cost gap?

a) $20

b) $40

c) $30

d) $25

7.Margin of safety is a term best described as the excess of:

a) Contribution margin over fixed expenses

b) Total expenses over the breakeven point

c) Sales over the breakeven point

d) Sales over total costs

8.A complete CVP graph will show that profit or loss at any level of sales is measured by:

a) A vertical line between the fixed cost line and the x-axis

b) A horizontal line between the revenue line and the Y-axis

c) A vertical line between the total revenue line and the total expenses line

d) A horizontal line between the total revenue line and the total expenses line

9. Contribution margin ratio is:

a) Total Contribution Margin / Sales

b) Sales / Contribution Margin per unit

c) Fixed Cost / Contribution margin per unit

d) Sales / Variable costs

10.Given selling price is $ 10 per unit, variable cost is $ 6 per unit and fixed cost is $ 5,000. What is breakeven point?

a) 500 units

b) 1,000 units

c) 1,250 units

d) None of the above

11. Given selling price is $ 20 per unit, variable cost is $ 16 per unit contribution is

a) $ 1.25 per unit

b) $ 4 per unit

c) $ 0.8 per unit

d) None of the above

12. Which of the following costs can be ignored when making a decision?

a) Opportunity costs.

b) Differential costs.

c) Sunk costs.

d) Relevant costs.

13.The term "opportunity cost" is best defined as:

a) the amount of money paid for an item.

b) the amount of money paid for an item, taking inflation into account.

c) the amount of money paid for an item, taking possible discounts into account.

d) the benefit associated with a rejected alternative when making a choice.

Susan is contemplating a job offer with an advertising agency where she will make $54,000 in

her first year of employment. Alternatively, Susan can begin to work in her father's business

where she will earn an annual salary of $38,000. If Susan decides to work with her father, the

opportunity cost would be:

A. $0.

B. $38,000.

C. $54,000.

D. $92,000.

E. irrelevant in deciding which job offer to accept.

14.Susan is contemplating a job offer with an advertising agency where she will make $54,000 in her first year of employment. Alternatively, Susan can begin to work in her father's business

where she will earn an annual salary of $38,000. If Susan decides to work with her father, the

opportunity cost would be:

a) $0.

b) $38,000.

c) $54,000.

d) $92,000.

15. When is the best time during the product life cycle to implement cost

reduction measures?

a) during the production stage of the product life cycle

b) during the planning stage of the product life cycle

c) during the logistics stage of the product life cycle

d) at any time during the product life cycle

16. Life-cycle cost management does NOT consist of

1. Actions taken to enable a product to be designed, developed, produced,

marketed, distributed, operated, maintained, serviced, and disposed of in order to

maximize profits.

2. Actions to extend the life of a product through design, development, production, and maintenance.

3. Actions that focus on minimizing the cost of developing, designing, producing, distributing, operating, servicing, and disposal of a product.

4. Actions taken to design, develop, test, market, distribute, maintain, service, and dispose of a product to maximize revenues.

a) 1, 2, 3

b) 2, 3, 4

c) 3, 4, 1

d) 4, 1, 2,

17.A firm is using ________ when it charges a high, premium price for a new product with the

intention of reducing the price in the future.

a) price skimming

b) trial pricing

c) value pricing

d) market-penetration pricing

18. ________ pricing is the approach of setting a low initial price in order to attract a large

number of buyers quickly and win a large market share.

A) Market-skimming

B) Market-penetration

C) Below-market

D) Value-based

19. What is a flexible budget?

a) A budget that does not change through the budget period.

b) A budget that shows a detailed schedule of expected sales for the budget period.

c) A budget that does not change as volume changes.

d) A budget that adjusts for changes in the volume of activity

20.There are a number of benefits associated with budgeting. Which of the following is not frequently? cited as a benefit of the budget process?

a) Budget eliminates the opportunity for slack or padding within an organisation.

b) Budgets provides a method of allocating and using resources within the organisation.

c) Budget are an early warning system. They highlight where investigation and appropriate

correction action is necessary.

21.Which of the following is not a part of budgeting?

a) planning

b) finding bottlenecks

c) providing performance evaluations

d) preventing net operating losses

22.Activity-based costing is preferable in a system:

a) When multiple products have similar product volumes and costs

b) With a large direct labor cost as a percentage of the total product cost

c) With multiple, diverse products

d) Where management needs to support an increase in sales price

23. Absorption costing is also referred to as:

a) direct costing

b) marginal costing

c) full costing

c) variable costing

24. In the Balanced Scorecard, it describes four perspectives that need to be balanced for companies to become and remain competitive. Which perspective places more emphasis on investing in employees?

a. Financial.

b. Customer.

c. Internal business processes.

d. Learning & growth.

25.Balanced scorecard perspective focuses on all operations which lead to value creation process for customers is classified as:

a) learning perspective

b) financial perspective

c) internal business process perspective

d) customer perspective

please show the workouts for each question where is necessary