BUSI 354 Quiz 1,2,3

BUSI 354 Quiz 1 – Module 3: Pricing Decisions and Cost Management

  1. The three major influences on pricing decisions are:
  2. The strategy in which companies systematically evaluate all aspects of the value-chain business functions with the objective of reducing costs to meet customers’ needs is referred to as:
  3. When the firm uses the target-costing approach to pricing, the target cost per unit is the difference between the per unit target price and the per unit target:
  4. Which of the following best describes the cost-plus pricing approach?
  5. Which of the following pairs are characteristics of price-takers?
  6. Which of the following pairs are characteristics of price-setters?
  7. Green Pastures golf course is planning for the coming season. Investors would like to earn a 10% return on the company’s $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $15,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $20 per golfer.
  8. Sheltar’s TV currently sells small televisions for $180. It has costs of $140. A competitor is bringing a new small television to market that will sell for $150. Management believes it must lower the price to $150 to compete in the market for small televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Sheltar’s sales are currently 100,000 televisions per year. What is the change in operating income if marketing is correct and the sales price and volume are changed?
  9. Block Island TV currently sells large televisions for $360. It has costs of $280. A competitor is bringing a new large television to market that will sell for $300. Management believes it must lower the price to $300 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Block Island TV sales are currently 100,000 televisions per year. What is the change in operating income if marketing is correct and the sales price and volume are changed?
  10. Block Island TV currently sells large televisions for $360. It has costs of $280. A competitor is bringing a new large television to market that will sell for $300. Management believes it must lower the price to $300 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Block Island TV sales are currently 100,000 televisions per year. What is the target cost if the company wants to maintain its same income level, and marketing is correct?
  11. After conducting a market research study, Potter Products decided to produce an electric coffee pot to complement its line of kitchen products. It is estimated that the new coffee pot can be sold at a target price of $46. The annual target sales volume for the coffee pot is 300,000. Potter has target operating income of 18% of sales. What are the target sales revenues?
  12. After conducting a market research study, Potter Products decided to produce an electric coffee pot to complement its line of kitchen products. It is estimated that the new coffee pot can be sold at a target price of $46. The annual target sales volume for the coffee pot is 300,000. Potter has target operating income of 18% of sales. What is the target operating income?
  13. After conducting a market research study, Schultz Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $60. The annual target sales volume for interior doors is 20,000. Schultz has target operating income of 20% of sales. What is the total target cost?
  14. After conducting a market research study, Potter Products decided to produce an electric coffee pot to complement its line of kitchen products. It is estimated that the new coffee pot can be sold at a target price of $46. The annual target sales volume for the coffee pot is 300,000. Potter has target operating income of 18% of sales. What is the target cost for each coffee pot?

BUSI 354 Quiz 2 – Module 5: Period Cost Allocation

  1. Which of the following methods of allocating support department costs is both simple and intuitive?
  2. Which method allocates costs by explicitly including the mutual services rendered among all support departments?
  3. Which of the following describes the complete reciprocated cost?
  4. The step-down allocation method
  5. Joe’s Tire Company has two support departments, Personnel and Maintenance. The Maintenance Department costs of $80,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $20,000 are allocated based on the number of employees. Costs of Departments A and B are $40,000 and $60,000, respectively. Data on standard service hours and number of employees are as follows: How much of the cost of the Maintenance Department is allocated to Department B using the direct method? (round to the nearest dollar)
  6. Betty’s Book and Music Store has two service departments, Warehouse and Data Centre. Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours. Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Using the direct method, what amount of Data Centre Department costs will be allocated to Music Department? (round to the nearest dollar)
  7. Betty’s Book and Music Store has two service departments, Warehouse and Data Centre. Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours. Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Using the step-down method, what amount of Warehouse Department cost will be allocated to Music Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round to the nearest dollar)
  8. Betty’s Book and Music Store has two service departments, Warehouse and Data Centre. Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours. Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Using the step-down method, what amount of Data Centre Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round to the nearest dollar)
  9. Joanne, owner of Automated Fabric, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: What is the complete reciprocated cost of the Maintenance Department? (round to the nearest dollar)
  10. Joanne, owner of Automated Fabric, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: What is the complete reciprocated cost of the Personnel Department? (round to the nearest dollar)

BUSI 354 Quiz 3 – Module 6: Joint Cost Allocations

  1. What type of cost is the result of an event that results in multiple products simultaneously?
  2. Costs which are assignable beyond the splitoff point at which individual products emerge are called
  3. Which method allocates joint costs on the basis of each product’s relative sales value at the splitoff point?
  4. An advantage of the sales value at splitoff method is
  5. The decision of whether to process products beyond the splitoff process should be based on which of the following?
  6. All of the following statements about the constant gross margin percentage of net realizable method are true EXCEPT
  7. Which method of allocating costs would be used if the selling prices of all products at the splitoff point are unavailable?
  8. Two finished products, [A & B], are sold for $16 a unit and $24 a unit, respectively. Each product can also be sold at the splitoff point. Product A can be sold for $10 and Product B for $8. Joint costs for the two products totalled $8,000 for January for 600 units of A and 500 units of B. What are the respective joint costs assigned to each unit of products A and B if the sales value at splitoff method is used?
  9. Cranbrook Chemical Ltd. manufactures two industrial compounds. In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000. The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton. The respective selling prices of Jarlon and Kharton are $38 and $58. Both products may be processed further. Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product. The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively. The selling price of Jaxton is $48 per jar. The selling price of Kraxton is $102 per jar. Using the sales value at splitoff method, the joint costs allocated to Jarlon would be
  10. Cranbrook Chemical Ltd. manufactures two industrial compounds. In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000. The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton. The respective selling prices of Jarlonand Kharton are $38 and $58. Both products may be processed further. Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product. The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively. The selling price of Jaxton is $48 per jar. The selling price of Kraxton is $102 per jar. Using the NRV method, the amount of joint costs allocated to Jaxton is
  11. Cranbrook Chemical Ltd. manufactures two industrial compounds. In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000. The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton. The respective selling prices of Jarlon and Kharton are $38 and $58. Both products may be processed further. Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product. The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively. The selling price of Jaxton is $48 per jar. The selling price of Kraxton is $102 per jar. The incremental benefit or (loss) of processing Jarlon into Jaxton is
$3.99
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  1. BUSI 354 Quiz 1
  2. BUSI 354 Quiz 3
  3. BUSI 354 Quiz 2
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