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Return to Accounting: A Smart Approach 4e Student Resources
Chapter 13 Multiple-choice questions
Pricing and Costs
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not completed
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A retailer is setting the price of a laptop computer. He is considering using either a 4% sales margin or a 7.5% cost mark-up method. What would the selling price be, if his cost of sales is £600?
£645 margin or £624 mark-up
correct
incorrect
£645 margin or £625 mark-up
correct
incorrect
£624 margin or £645 mark-up
correct
incorrect
£625 margin or £645 mark-up
correct
incorrect
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not completed
.
A manufacturer is in negotiation with the retailer over a printer with a selling price of £200. What would her cost of sales have to be to achieve either a 15% sales margin or 25% cost mark-up?
£150 margin or £170 mark-up
correct
incorrect
£150 margin or £174 mark-up
correct
incorrect
£170 margin or £160 mark-up
correct
incorrect
£174 margin or £150 mark-up
correct
incorrect
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not completed
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A mobile phone will be priced at £150. What will its target cost of sales need to be if the retailer takes a 30% sales margin and the manufacturer, a 40% sales margin?
£63
correct
incorrect
£105
correct
incorrect
£18
correct
incorrect
£45
correct
incorrect
*
not completed
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A factory making furnishings has spare capacity and is considering taking on a special order to make 200 cushions. It usually charges £2.30 to recover its overheads. If its variable costs are £8.20 and it will incur packaging costs of £400, what is the minimum price it should charge?
£10.50
correct
incorrect
£10.20
correct
incorrect
£12.50
correct
incorrect
£8.20
correct
incorrect
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not completed
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Which methods of costing are most appropriate for setting long-term prices?
Absorption and marginal costing
correct
incorrect
Absorption and activity-based costing
correct
incorrect
Marginal costing, absorption, and activity-based costing
correct
incorrect
Activity-based costing and marginal costing
correct
incorrect
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not completed
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Which pricing strategy is likely to set a high price?
A price-skimming strategy to exploit price elasticity
correct
incorrect
A price-skimming strategy to exploit price inelasticity
correct
incorrect
A penetration-price strategy to exploit price inelasticity
correct
incorrect
A penetration-price strategy to exploit price elasticity
correct
incorrect
*
not completed
.
A company has carried out market research into how many cars it can sell at different prices. If the variable costs per car are £8,000 and total fixed costs are £50,000, from the information below, what is the optimum price?
Option 1
correct
incorrect
Option 2
correct
incorrect
Option 3
correct
incorrect
Option 4
correct
incorrect
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not completed
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Which is least likely to be a problem of target costing?
Identifying cost savings without reducing the quality of the product specification
correct
incorrect
Getting agreement among a multi-discipline team
correct
incorrect
Estimating costs accurately before the product is manufactured
correct
incorrect
Identifying a competitors' selling price to determine a target selling price
correct
incorrect
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not completed
.
Which of the following companies can most benefit from life-cycle costing?
Those with high advertising costs
correct
incorrect
Those with products, which have a long life cycle
correct
incorrect
Those with low investment in manufacturing equipment
correct
incorrect
Those with high research and development costs
correct
incorrect
*
not completed
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A company has two divisions: one making microchips and the other, calculators. The microchip division sells chips to the calculator division, which can buy a similar chip from an outside supplier for £36 per 1,000. The costs of a 1,000 chips made by the microchip division includes a variable cost of is £25 and an allocation of overhead costs of £6.
If there is spare capacity in the microchip division, what should the transfer price be?
More than £31
correct
incorrect
More than £25
correct
incorrect
£25-£36
correct
incorrect
More than £36
correct
incorrect
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