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Cost Management and Pricing Decisions
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Cost Management and Pricing Decisions – MCQs
29 questions. Click to practice.
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Correct options are highlighted when revealed.
1.
In cost-plus pricing, what does the 'plus' represent?
overseas expenses
profit margin
irrecoverable cost
contracted service cost
2.
Which pricing method involves adding a markup to the cost base to determine the final price?
pricing based on market conditions
pricing determined by incurred costs
cost plus pricing
pricing with fixed costs
value-based pricing
3.
What is the term for the method of breaking down and examining a competitor's products or operations to understand their technology?
contract engineering
reverse engineering
focused engineering
offshore engineering
none of the above
4.
What term describes a seller charging a higher price for the same product during periods of high demand?
peak-load pricing
flexible pricing
demand elasticity
demand inelasticity
variable pricing
5.
What is the process called that involves a detailed analysis of the value chain to minimize expenses and enhance quality in order to satisfy customers?
backward engineering
value engineering
goal-oriented engineering
process engineering
cost engineering
6.
What term describes the profit a company plans to achieve from selling each individual unit of its product?
target operating income per unit
target cost per unit
total current full cost
total cost per unit
7.
What type of cost, if removed, would not diminish the perceived value customers receive from a product or service?
Costs built into the design
Costs that are fixed or unavoidable
Costs that contribute to the product's value
Costs that do not add any value
8.
What term describes the process of utilizing resources to achieve specific objectives?
cost incurrence
valued incurrence
locked incurrence
non valued incurrence
9.
What term describes a situation where the quantity demanded shows little to no response to changes in price?
elasticity of demand
price elasticity
inelastic pricing
demand inelasticity
none of the above
10.
What term describes the anticipated amount customers are likely to pay for a specific product or service in the market?
target price
target cost
outsourcing price
offshore price
market value
11.
What term describes expenses that are anticipated for the future but have not yet been incurred?
designed-in costs
locked-in costs
value-added costs
both designed-in and locked-in costs
12.
When cost is removed, decreasing the perceived benefit that customers gain from a market offering is classified as _____________?
built-in expenses
retention costs
value-added cost
non-beneficial cost
13.
What is the term for a seller charging different prices for the same product to various customers?
price imposition
price discrimination
price segmentation
price manipulation
price variation
14.
What is the method called that gathers and monitors the expenses of each business function within the value chain for every market offering, spanning from research and development to customer service?
product lifecycle analysis
budgeting throughout the lifecycle
lifecycle costing
costing based on target prices
15.
Given a total output of 25,000 units and a desired annual operating income of $300,000, what is the target operating income allocated per unit?
$15 per unit
$12 per unit
$16 per unit
$18 per unit
None of the above
16.
What term describes the complete expenses a customer faces when purchasing, using, maintaining, and eventually disposing of a product or service?
planned life cycle
desired life cycle
customer life cycle
functional life cycle
none of the above
17.
Which pricing strategy is commonly employed by service providers like home repair, architectural, and auto repair businesses?
product lifecycle pricing approach
budgeting method based on lifecycle
costing technique over the product lifecycle
time and materials pricing approach
fixed price contract method
18.
What term describes the entire duration from the initial research and development of a product through to its support and customer service stages, assuming support is not provided for that specific product?
product life cycle
life cycle budgeting
life cycle costing
target costing
19.
Given an invested capital of $150,000 and a desired return on investment of 16%, what is the target annual operating income?
$27,000
$26,000
$24,000
$25,000
20.
Which of the following primarily affects both supply and demand?
buyers
expenses
rivals
all the mentioned factors
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