Question 1

Match the definitions that follow with the term a-e it defines.
-Sets the price according to competitors
A)Demand-based concept
B)Competition-based concept
C)Product cost concept
D)Target costing
E)Production bottleneck

Accepted Answer

The term that matches the definition "sets the price according to competitors" is the competition-based concept.

Question 2

Match each of the definitions that follow with the term a-e it defines.
-Evaluation of how income will change based on an alternative course of action
A)Opportunity cost
B)Sunk cost
C)Theory of constraints
D)Differential analysis
E)Product cost distortion

Accepted Answer

Differential analysis involves evaluating how income will change based on an alternative course of action. The other options are defined as follows:

A) Opportunity cost is the value of the next best alternative that must be given up to pursue a certain action.
B) Sunk cost is a cost that has already been incurred and cannot be recovered.
C) Theory of constraints is the idea that the performance of a system is limited by its weakest link or constraint.
E) Product cost distortion is the misallocation of costs to products, resulting in inaccurate information for decision making.

Question 3

Match each of the definitions that follow with the term a-e it defines.
-A document that initiates a product or process change
A)Engineering change order
B)Total cost concept
C)Variable cost concept
D)Normal selling price
E)Setup

Accepted Answer

A document that initiates a product or process change is known as Engineering Change Order.

Question 4

Match each of the definitions that follow with the term a-e it defines.
-Strategy that focuses on reducing bottlenecks
A)Opportunity cost
B)Sunk cost
C)Theory of constraints
D)Differential analysis
E)Product cost distortion

Accepted Answer

The definition describes the theory of constraints, which is a management strategy focused on identifying and reducing bottlenecks in the production process.

The other choices are defined as follows: 
A) Opportunity cost: the value of the next best alternative foregone in order to pursue a certain action 
B) Sunk cost: a cost that has already been incurred and cannot be recovered 
D) Differential analysis: a decision-making technique that involves comparing the costs and benefits of different options 
E) Product cost distortion: the misallocation of costs to products, resulting in inaccurate product cost information.

Question 5

Match each of the definitions that follow with the term a-e it defines.
-Includes manufacturing costs plus selling and administrative expenses
A)Engineering change order
B)Total cost concept
C)Variable cost concept
D)Normal selling price
E)Setup

Accepted Answer

The term that defines includes manufacturing costs plus selling and administrative expenses is the Total cost concept.

Question 6

Match each of the definitions that follow with the term a-e it defines.
-Possible result of using an inappropriate overhead allocation method
A)Opportunity cost
B)Sunk cost
C)Theory of constraints
D)Differential analysis
E)Product cost distortion

Accepted Answer

Product cost distortion refers to the possibility of using an inappropriate overhead allocation method, resulting in inaccurate product costs.

Question 7

Match each of the definitions that follow with the term a-e it defines.
-Target selling price to be achieved in the long term
A)Engineering change order
B)Total cost concept
C)Variable cost concept
D)Normal selling price
E)Setup

Accepted Answer

The normal selling price refers to the target selling price to be achieved in the long term. A) Engineering change order refers to modifications made to a product during the design or production process. B) Total cost concept refers to considering all costs associated with producing and selling a product when setting prices. C) Variable cost concept refers to considering only the variable costs (direct materials, direct labor, and variable overhead) when setting prices. E) Setup refers to the time and cost associated with preparing equipment or tools for production.

Question 8

Match each of the definitions that follow with the term a-e it defines.
-Revenue forgone from an alternative use of an asset
A)Opportunity cost
B)Sunk cost
C)Theory of constraints
D)Differential analysis
E)Product cost distortion

Accepted Answer

This definition specifically defines the concept of opportunity cost, which is the revenue or benefit that is forgone by choosing one option over another.

B) Sunk cost refers to costs that have already been incurred and cannot be recovered, regardless of which decision is made. This definition does not match the given definition.

C) Theory of constraints is a management philosophy focused on identifying and removing bottlenecks or constraints in a system in order to improve efficiency and profitability. This definition does not match the given definition.

D) Differential analysis involves comparing and analyzing the costs and benefits of different options in order to make a decision. While this is a related concept, it does not specifically match the given definition.

E) Product cost distortion refers to situations where inaccurate or incomplete cost information leads to incorrect decision-making. This definition does not match the given definition.

Therefore, the only answer that matches the given definition is A) Opportunity cost.

Question 9

Match the definitions that follow with the term a-e it defines.
-Combines market-based pricing with a cost-reduction emphasis
A)Demand-based concept
B)Competition-based concept
C)Product cost concept
D)Target costing
E)Production bottleneck

Accepted Answer

This definition describes the concept of target costing, which involves setting a target cost for a product and then finding ways to reduce costs to meet that target while still maintaining a desired level of quality and functionality.

Question 10

Match each of the definitions that follow with the term a-e it defines.
-Not relevant to future decisions
A)Opportunity cost
B)Sunk cost
C)Theory of constraints
D)Differential analysis
E)Product cost distortion

Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, making them not relevant to future decisions.

Question 11

Match the definitions that follow with the term a-e it defines.
-Constraint
A)Demand-based concept
B)Competition-based concept
C)Product cost concept
D)Target costing
E)Production bottleneck

Accepted Answer

The answer of Match the definitions that follow with the...

Question 12

Match each of the definitions that follow with the term a-e it defines.
-Changing tooling when preparing for a new product
A)Engineering change order
B)Total cost concept
C)Variable cost concept
D)Normal selling price
E)Setup

Accepted Answer

The term that defines changing tooling when preparing for a new product is "Setup".

Question 13

Match the definitions that follow with the term a-e it defines.
-Only includes the costs of manufacturing in product cost per unit
A)Demand-based concept
B)Competition-based concept
C)Product cost concept
D)Target costing
E)Production bottleneck

Accepted Answer

This definition describes the product cost concept, which only considers the costs related to manufacturing the product in determining its cost per unit. The other concepts listed are not related to this definition: demand-based concept focuses on forecasting sales, competition-based concept focuses on pricing relative to competitors, target costing focuses on setting a cost target before manufacturing, and production bottleneck refers to a constraint in the production process that limits output.

Question 14

Match each of the definitions that follow with the term a-e it defines.
-Variable manufacturing costs plus variable selling and administrative costs are included in cost per unit
A)Engineering change order
B)Total cost concept
C)Variable cost concept
D)Normal selling price
E)Setup

Accepted Answer

The concept of including variable manufacturing costs plus variable selling and administrative costs in cost per unit is known as the variable cost concept.

Question 15

Match the definitions that follow with the term a-e it defines.
-Sets the price according to demand
A)Demand-based concept
B)Competition-based concept
C)Product cost concept
D)Target costing
E)Production bottleneck

Accepted Answer

Setting the price according to demand is known as a demand-based concept.

Quiz 9: Differential Analysis, Product Pricing, and Activity-Based Costing

Match the definitions that follow with the term a-e it defines. -Sets the price according to competitors

Match each of the definitions that follow with the term a-e it defines. -Evaluation of how income will change based on an alternative course of action

Match each of the definitions that follow with the term a-e it defines. -A document that initiates a product or process change

Match each of the definitions that follow with the term a-e it defines. -Strategy that focuses on reducing bottlenecks

Match each of the definitions that follow with the term a-e it defines. -Includes manufacturing costs plus selling and administrative expenses

Match each of the definitions that follow with the term a-e it defines. -Possible result of using an inappropriate overhead allocation method

Match each of the definitions that follow with the term a-e it defines. -Target selling price to be achieved in the long term

Match each of the definitions that follow with the term a-e it defines. -Revenue forgone from an alternative use of an asset

Match the definitions that follow with the term a-e it defines. -Combines market-based pricing with a cost-reduction emphasis

Match each of the definitions that follow with the term a-e it defines. -Not relevant to future decisions

Match the definitions that follow with the term a-e it defines. -Constraint

Match each of the definitions that follow with the term a-e it defines. -Changing tooling when preparing for a new product

Match the definitions that follow with the term a-e it defines. -Only includes the costs of manufacturing in product cost per unit

Match each of the definitions that follow with the term a-e it defines. -Variable manufacturing costs plus variable selling and administrative costs are included in cost per unit

Match the definitions that follow with the term a-e it defines. -Sets the price according to demand