1. Which of the following is NOT true about pricing decisions?

a. Customers NEVER have an influence on demand and supply

2. Kaizen is a continuous improvement technique used to the time it takes to do
a task, eliminate waste, and improve operating efficiency and productivity.
a. True
3. The higher the price a monopolist sets, the lower the demand for the
monopolists product as customers seek substitute products or forgo buying
the product.
a. True
4. Companies operating in less competitive markets offer products or services
that differ from each other.
a. True
5. $6,250,000 on the sales order activity and 5,500 sales orders.
a. = 6250000/5500 batch-level costs.
6. The lower the cost of producing a product, the greater the quantity of
product the company is willing to supply.
a. True
7. _____ tracks and accumulates business function costs across the entire value
chain from a products initial R&D to its final customer service and support.
a. Life-cycle costing
8. Invested $3,500,000. $250,000 annually. Sales of 800 at $1,100.00 each
a. Target Rate of Return =250000/3500000 = 7.14%
9. Companies operating in competitive markets much NOT accept the prices set
by the market.
a. False
10.Sales-order cost are
a. Batch-level costs
11.In reference to locked-in cost curves and the cost-incurrence curves, the top
curve plots:
a. Cumulative locked-in cost
12.Investment capital $80,000,000 and 16% target rate of return on the
investment of 150,000 units.
a. Target Annual Operating Income and the target operating income per
unit
= 80000000*.016 =12,800,000; = 12,800,000/150,000 = $85.33
13.To set long-run process, managers calculate the ___ -cost of producing and
selling a product.
a. Full-cost
14.The target cost per units is NEVER lower than the existing full cost of the
product
a. False
15.Invested 2,500,000. $245,000 annually. Actual sales of 700 planks at $500.
Target rate on of return on the investment of 15%.
a. 2.33%

1. $6,250,000 on the sales order activity and 5,500 sales orders.

a. = 6250000/5500 batch-level costs.
2. Insensitivity of demand to price changes is called:
a. Demand inelasticity
3. 7% defect on 140,000units
a. 9800 defective units
4. Value engineering decrease both value-added costs
a. True
5. The Sherman Act, the Clayton Act, the Federal Trade Commission Act, and the
Robinson-Patman Act are:
a. Predatory pricing
6. Invested $3,500,000. $250,000 annually. Sales of 800 at $1,100.00 each
a. Target Rate of Return =250000/3500000 = 7.14%
7. Life -cycle budgeting highlights costs throughout the products life cycle and,
in doing so, facilitates target pricing, target costing, and value engineering at
the design stage before costs are locked in.
a. True
8. In reference to locked-in cost curves and the cost-incurrence curves, the top
curve plots:
a. Cumulative locked-in cost
9. In the time-and-materials method, individual jobs are priced based on
materials and labor time.
a. True
10.12% operating income and target price $750
a. $90 OI and $660 per units
11.The reduction in selling price below list selling pricing to encourage customer
to purchase more quantities is:
a. Price discount
12.A:200,4500 B:350,3800 C$500,2400
a. 900,000;1,330,00;1,200,000
13.Value engineering entails improvements in product designs, changers in
materials specifications, and modifications in process methods.
a. True
14.Price discounts are a function of multiple factor
a. True
15.Which of the following is NOT true about international competition?
a. Fluctuations in exchange rates between Correct!
16.Collusive pricing occurs when companies in an industry conspire
a. True
17.$740 full cost, 10%makeup
a. Prospective price is $814
18.The higher the price a monopolist sets, the higher the demand for the
monopolists product as customers seek substitute products or forgo buying
the product.
a. False
19.Companies operating in less competitive markets offer products or services
that differ from each other.
a. True
20.The cost-based approach is also called:

a. Cost-Plus