Question 1

Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-What are target sales revenues?

Accepted Answer

The target sales revenue can be calculated by multiplying the expected sales volume (20,000) by the selling price ($60). 
Target Sales Revenue = 20,000 x $60 = $1,200,000. 
Therefore, the correct answer is C. None of the other answer choices are correct. 
As there is only one correct answer, there is no need to provide the best choice with an explanation.

Question 2

The department usually in the best position to identify customers' needs is the:

Accepted Answer

The sales and marketing department is responsible for interacting with customers and identifying their needs, preferences, and expectations. They gather feedback from customers through surveys, focus groups, and other market research methods to ensure that the company is meeting the needs of its target market. The production department is more focused on the actual production of goods, while the distribution department is concerned with getting products to customers once they are produced. The design department is responsible for developing the look and functionality of products based on input from the sales and marketing department.

Question 3

The ________ price is the basis for calculating target cost per unit.

Accepted Answer

D

Question 4

Place the following steps for the implementation of target costing in order:
A = Derive a target cost
B = Develop a target price
C = Perform value engineering
D = Determine target operating profit

Accepted Answer

The correct sequence for implementing target costing is: Develop a target price (B), Determine target operating profit (D), Derive a target cost (A), and Perform value engineering (C). This reflects the process of setting a price based on market conditions, subtracting a desired profit margin to determine a cost target, and then engineering the product to meet this cost.

Question 5

Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-What is the target cost for each interior door?

Accepted Answer

To calculate the target cost, we need to subtract the target operating profit (20% of sales price) from the selling price. 
Target operating profit = 20% x $60 = $12
Target cost = Selling price - Target operating profit = $60 - $12 = $48

Therefore, the target cost for each interior door is $48.

The best choice is to produce the door for $48, as this will allow Elliott Manufacturing to achieve their target operating profit of 20% while still selling the door at the desired price of $60.

Question 6

Which of the following is NOT associated with target costing?

Accepted Answer

The mark-up component is not associated with target costing. Target costing focuses on reducing costs and determining the maximum amount that can be spent on a product or service, whereas mark-up is a pricing strategy that involves adding a percentage to the cost of a product to determine its selling price.

Question 7

Answer the following questions using the information below:
Potter Products has produced an electric coffee pot to complement its range of kitchen products.The new coffee pot can be sold at a target price of $46,and annual target sales volume for the coffee pot is 250 000.Potter has target operating profit of 20% of sales.
-What is the total target cost?

Accepted Answer

The answer of Answer the following questions using the information...

Question 8

Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-What is the target cost?

Accepted Answer

The target cost can be calculated by first determining the target sales revenue, which is 20,000 doors at $60 each, totaling $1,200,000. With a target operating profit of 20% of sales, the target profit is $1,200,000 * 20% = $240,000. Subtracting this target profit from the sales revenue gives the target cost: $1,200,000 - $240,000 = $960,000.

Question 9

________ is a systematic evaluation of all aspects of the value chain,with the objective of reducing costs and achieving a quality level that satisfies customers.

Accepted Answer

Value engineering is the process of analyzing each step in the value chain to identify opportunities to reduce costs while achieving a high level of quality. This systematic evaluation helps organizations to be more competitive in the market by producing high-quality products at a lower cost. Target costing is more focused on setting a target cost for a product or service based on the customer's perceived value, while market costing and capacity costing are not related to the systematic evaluation of the value chain.

Question 10

Answer the following questions using the information below:
Potter Products has produced an electric coffee pot to complement its range of kitchen products.The new coffee pot can be sold at a target price of $46,and annual target sales volume for the coffee pot is 250 000.Potter has target operating profit of 20% of sales.
-What are the target sales revenues?

Accepted Answer

The target sales revenue is calculated by multiplying the target price by the annual target sales volume: $46 * 250,000 = $11,500,000.

Question 11

Which of the following is FALSE regarding target costing?

Accepted Answer

The answer of Which of the following is FALSE regarding...

Question 12

Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide adequate operating profit is referred to as:

Accepted Answer

The product strategy described in the question is target costing. This approach involves starting with a target selling price, and then designing and producing the product to meet that price while still achieving the desired level of profit. Cost-plus pricing (B) involves adding a markup to the product's cost to arrive at a selling price, and full costing (A) is a method of determining the total cost of a product by considering all of the direct and indirect costs involved. Kaizen costing (D) is a continuous improvement approach that focuses on reducing costs over time.

Question 13

The two basic approaches for pricing are: competition-based and cost-based pricing.

Accepted Answer

The answer of The two basic approaches for pricing are:...

Question 14

Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-What is the target operating profit?

Accepted Answer

To calculate the target operating profit, we need to first calculate the total sales revenue: 
Total sales revenue = Selling price x Target sales volume = $60 x 20,000 = $1,200,000 
Then, we can calculate the target operating profit as: 
Target operating profit = 20% of total sales revenue = 0.2 x $1,200,000 = $240,000

Therefore, the answer is A) $240,000.

As for the second question, there isn't enough information given to provide a "best choice."

Question 15

Target pricing:

Accepted Answer

Target pricing is a pricing method that sets the price based on the customers' perceived value of the product. It is a customer-focused approach that takes into consideration the price that customers are willing to pay for the product.

Question 16

Long-run pricing decisions include:

Accepted Answer

Long-run pricing decisions involve setting prices in markets where there is flexibility, unlike short-term decisions which focus on immediate adjustments or special orders.

Question 17

Answer the following questions using the information below:
Potter Products has produced an electric coffee pot to complement its range of kitchen products.The new coffee pot can be sold at a target price of $46,and annual target sales volume for the coffee pot is 250 000.Potter has target operating profit of 20% of sales.
-What is the target operating profit?

Accepted Answer

The answer of Answer the following questions using the information...

Question 18

Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-When target costing and target pricing are used together:

Accepted Answer

The target cost is indeed the estimated long-run cost that allows a product or service to achieve a desired profit margin when target costing and target pricing are used together. This approach ensures that the product is priced competitively while still meeting profit goals.

Question 19

What are the major influences that must be considered when pricing a new product? Discuss each briefly.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of What are the major influences that must...

Question 20

Fixed costs are relevant for short-run pricing decisions because they cannot be changed.

Accepted Answer

Fixed costs are not relevant for short-run pricing decisions because they do not change with the level of output or sales, meaning they are incurred regardless of the company's level of production or sales volume.

Quiz 7: Target Costing, Managing Activities and Managing Capacity

The department usually in the best position to identify customers' needs is the:

The ________ price is the basis for calculating target cost per unit.

Place the following steps for the implementation of target costing in order: A = Derive a target cost B = Develop a target price C = Perform value engineering D = Determine target operating profit

Which of the following is NOT associated with target costing?

________ is a systematic evaluation of all aspects of the value chain,with the objective of reducing costs and achieving a quality level that satisfies customers.

Which of the following is FALSE regarding target costing?

The two basic approaches for pricing are: competition-based and cost-based pricing.

Target pricing:

Long-run pricing decisions include:

What are the major influences that must be considered when pricing a new product? Discuss each briefly. _ _

Fixed costs are relevant for short-run pricing decisions because they cannot be changed.

Quiz 7: Target Costing, Managing Activities and Managing Capacity

The department usually in the best position to identify customers' needs is the:

The ________ price is the basis for calculating target cost per unit.

Place the following steps for the implementation of target costing in order: A = Derive a target cost B = Develop a target price C = Perform value engineering D = Determine target operating profit

Which of the following is NOT associated with target costing?

________ is a systematic evaluation of all aspects of the value chain,with the objective of reducing costs and achieving a quality level that satisfies customers.

Which of the following is FALSE regarding target costing?

The two basic approaches for pricing are: competition-based and cost-based pricing.

Target pricing:

Long-run pricing decisions include:

What are the major influences that must be considered when pricing a new product? Discuss each briefly. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Fixed costs are relevant for short-run pricing decisions because they cannot be changed.

What are the major influences that must be considered when pricing a new product? Discuss each briefly. _ _