Week 5 Quiz 2
1- (TCO 7) When companies do not want to use market prices or find it too costly, they typically use __________ prices, even though suboptimal decisions may occur.
2- (TCO 7) The first step in implementing target pricing and target costing is
3- (TCO 7) The amount of markup percentage is usually higher if
4- (TCO 7) An understanding of life-cycle costs can lead to
5- (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units?
6- (TCO 8) A benefit of using a market-based transfer price is
7- (TCO 8) A transfer-pricing method leads to goal congruence when managers
8- (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called
9- (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that
10- (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound. Which of the following formulas correctly reflects the company’s operating income per pound?