Managerial Accounting Homework

Cost Accounting, 14e, Global Edition (Horngren/Datar/Rajan)
Chapter 12 Pricing Decisions and Cost Management

Objective 12.1

1) Companies should only produce and sell units as long as:
A) there is customer demand for the product
B) the competition allows it
C) the revenue from an additional unit exceeds the cost of producing it
D) there is a generous supply of low-cost direct materials
Answer: C
Diff: 2
Terms: target price
Objective: 1
AACSB: Ethical reasoning

2) Too high a price may:
A) deter a customer from purchasing a product
B) increase demand for the product
C) indicate supply is too plentiful
D) decrease a competitor's market share
Answer: A
Diff: 1
Terms: target price
Objective: 1
AACSB: Reflective thinking

3) Companies must always examine their pricing:
A) based on the supply of the product
B) based on the cost of producing the product
C) through the eyes of their customers
D) through the eyes of their competitors
Answer: C
Diff: 3
Terms: target price
Objective: 1
AACSB: Ethical reasoning

4) Competitors:
A) with alternative products can force a company to lower its prices
B) can gain a competitive pricing advantage with knowledge of your costs and operating policies
C) may span international borders
D) All of these answers are correct.
Answer: D
Diff: 2
Terms: target price
Objective: 1
AACSB: Reflective thinking

5) Fluctuations in exchange rates between different currencies can influence the:
A) cost of products using foreign suppliers
B) pricing of alternative products offered by foreign competitors
C) demand for products of foreign competitors
D) All of these answers are correct.
Answer: D
Diff: 2
Terms: target price
Objective: 1
AACSB: Multiculturalism and diversity

6) The cost of producing a product:
A) in highly competitive markets controls pricing
B) affects the willingness of a company to supply a product
C) for pricing decisions includes manufacturing costs, but not product design costs
D) None of these answers are