QUESTION 1 Match the type of company and its most likely pricing approach given the company sells products that are not unique and faces significant competition. Type of Company A. Cost-plus pricing B. Pricing approach Price taker C. Price setter D. Target costing

QUESTION 1 Match the type of company and its most likely pricing approach given the company sells products that are not unique and faces significant competition. Type of Company A. Cost-plus pricing B. Pricing approach Price taker C. Price setter D. Target costing

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter1: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 7MCQ

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Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

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Although the cost-plus approach to product pricing may be used by management as a general guideline, what are examples of other factors that managers should consider in setting product prices?
Although the cost-plus approach to product pricing may be used by management as a general guideline, what are examples of other factors that managers should consider in setting product prices?
A transfer pricing arrangement that uses the price that would be charged to an external customer is a______. A. market-based approach B. negotiated approach C. cost approach D. decentralized approach
For which cost concept used in applying (he cost-plus, approach to product pricing are fixed manufacturing costs, fixed selling and administrative expenses, and desired profit allowed for in determining the markup? A. Total cost B. Product cost C. Variable cost D. Standard cost
Define price elasticity of demand. Give an example of a product with relatively elastic demand and an example of a product with relatively inelastic demand. (Give examples not given in the text.)
A transfer pricing structure that considers the opportunity costs of selling to internal rather than external customers uses_______. A. the cost approach B. the general transfer pricing approach C. the market-based approach D. the opportunity cost approach
a) Compare and contrast variable cost-plus pricing and target pricing, and indicate the circumstances in which each might be appropriate. b) Compute the selling price based on the compay’s pricing policy and indicate whether the customer’s maximum price is consistent with the company’s pricing policy. c) Assume that further tests have confirmed the product’s useful life, and that SA Berhad wishes to maximise profits by reducing costs. Indicate techniques which could be used to achieve a reduction in the product cost. d) Define Business Process Re-engineering (BPR).
"In target costing, prices determine costs rather than vice versa." Explain. Question content area bottom Part 1 A. In target costing, managers start with a predatory price. Then they determine how much they can spend in variable and fixed costs to breakeven. Thus, prices essentially determine costs. B. In target costing, managers start with a price that will result in breakeven. They the managers brainstorm to find ways to lower costs without raising the price to earn more profit. Thus, prices essentially determine costs. C. In target costing, managers start with a market price. Then they try to design a product with costs low enough to be profitable at that price. Thus, prices essentially determine costs. D. In target costing, managers start with a cost-plus price. Then they work backwards to determine how much their costs are for production and the markup is on the product. Thus, prices essentially determine costs.
Target costing A target cost is 'a product cost estimate derived by subtracting the desired profit margin from a competitive market price. (CIMA, 2005). Required: The target costing is cost management techniques, and discuss the advantages of using this technique within firms.
1- What potential problems should be avoided in relevant-cost analysis? 2- Describe life-cycle budgeting and life-cycle costing and when companies should use these techniques. 3- Describe three alternatives of cost-plus pricing methods? 4- Why is it important to distinguish cost incurrence from locked-in cost? 5- How do companies determine target costs?
Which of the following is not an application of cost-volume-profit analysis? Setting prices for products and services. Performing strategic “what-if” analyses. Deciding whether to cut a product line. Determining the short-term cost or profit implications of many decisions. Deciding whether to make or buy a given product or service.
Cost-volume-profit analysis is useful for Question 8 options: 1) helping managers to answer "what-if" questions. 2) implementing a differentiation strategy. 3) eliminating uncertainty about external factors, such as interest rates. 4) for long-range planning. 5) assigning costs to products.