Chapter 13 Multiple-choice questions

* not completed

. 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

* 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

* not completed

. 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

. 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

* not completed

. 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

* not completed

. 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

* not completed

. 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

* 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

. 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