Question 1

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

This definition describes the variable cost concept, which includes all variable costs in the cost per unit calculation. The other choices are not relevant to this definition.

Question 2

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

Competition-based concept sets the price according to competitors, taking into consideration the prices of similar products in the market.

Question 3

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

Normal selling price refers to the target selling price to be achieved in the long term.

Question 4

Falcon Inc. manufactures Product B, incurring variable costs of $15.00 per unit and fixed costs of $70,000. Falcon desires a profit equal to a 12% rate of return on assets, $785,000 of assets are devoted to producing Product B, and 100,000 units are expected to be produced and sold.
a) Compute the markup percentage, using the total cost concept.
b) Compute the selling price of Product B.
Round your intermediate calculations and final answer to two decimal places.

Accepted Answer

The answer of Falcon Inc. manufactures Product B, incurring variable...

Question 5

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 6

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

Revenue forgone from an alternative use of an asset is the definition of opportunity cost.

Answer: B 
 Sunk cost is a cost that has already been incurred and cannot be recovered. None of the other definitions match this description.

Answer: C 
 The management approach that identifies constraints that hinder a company's ability to achieve its goals is the theory of constraints. None of the other definitions match this description.

Answer: D 
 Differential analysis is a method of comparing the expected costs and benefits of different alternatives. None of the other definitions match this description.

Answer: E 
 Product cost distortion refers to errors in assigning costs to products, which can lead to incorrect pricing decisions. None of the other definitions match this description.

Question 7

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 distortion of costs due to the inappropriate allocation of overhead. This can result in the mis-pricing of products, which can in turn impact profitability.

Question 8

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

The definition given only applies to the product cost concept.

Question 9

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 an engineering change order.

B) Total cost concept refers to the idea that all costs, including fixed and variable, should be considered when determining the cost of a product or service.

C) Variable cost concept refers to the idea that only the variable costs of a product or service should be considered when determining its cost.

D) Normal selling price is the price at which a product or service is usually sold.

E) Setup refers to the time and resources needed to prepare a machine or production line for a new job or process.

Question 10

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 is the evaluation of how income will change based on an alternative course of action. The other options are:
A) Opportunity cost is the value of the next best alternative that must be forgone in order 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 a management philosophy that focuses on identifying and managing bottlenecks in a production process.
E) Product cost distortion refers to a situation where the actual cost of producing a product differs from the cost that is assigned to it for reporting purposes.

Question 11

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 definition given is that of the total cost concept, which includes all costs associated with a product or service, including manufacturing costs and overhead expenses. The other options do not match this definition:

A) Engineering change order - a document that specifies changes to a product's design or production process
C) Variable cost concept - a cost concept that distinguishes between fixed and variable costs
D) Normal selling price - the price charged for a product or service that is considered reasonable or customary within a given market 
E) Setup - the process of preparing machines or equipment for production.

Question 12

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 the definition of the demand-based concept.

Question 13

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

Target costing combines market-based pricing with a cost-reduction emphasis to ensure a product is produced at a cost that enables it to be sold at a price that customers are willing to pay.

Question 14

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 strategy that focuses on reducing bottlenecks is referred to as the Theory of Constraints. A) Opportunity cost refers to the cost of forgoing the next best alternative when making a decision. B) Sunk cost is a cost that has already been incurred and cannot be recovered. D) Differential analysis is the process of analyzing the difference in costs and benefits between two alternatives. E) Product cost distortion is the misallocation of costs to products or services.

Question 15

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" (choice E). Engineering Change Order (choice A) refers to a formal method of modifying an already released product design. Total cost concept (choice B) is a cost accounting method that considers both variable and fixed costs of production. Variable cost concept (choice C) is a cost accounting method that focuses only on the variable costs of production. Normal selling price (choice D) is the price at which a company expects to sell its products/services in the normal course of business.

Question 16

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.

Quiz 24: Differential Analysis, Product Pricing, and Activity-Based Costing

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 competitors

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 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. -Revenue forgone from an alternative use of an asset

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

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. -A document that initiates a product or process change

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. -Includes manufacturing costs plus selling and administrative expenses

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

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. -Strategy that focuses on reducing bottlenecks

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

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