Question : 21) Explain the difference between locked in costs and costs : 1211808

 

21) Explain the difference between locked in costs and costs incurred. Which of these types of costs does a traditional accounting system emphasize? At which stage of the value chain are most costs locked-in? At which stage of the value chain are most costs incurred? What implication does this have for good cost management?

 

Objective 13.5

 

1) The cost-plus pricing approach is generally in the form  ________.

A) Cost base + Markup component = Prospective selling price

B) Prospective selling price – Cost base = Markup component

C) Cost base + Gross margin = Prospective selling price

D) Variable cost + Fixed cost + Contribution margin = Prospective selling price

2) In cost-plus pricing, the markup component ________.

A) is a rigid number

B) is ultimately determined by the market

C) provides a means to calculate the actual selling price

D) is the end rather than the start of pricing decisions

 

3) Which of the following can be used to determine markup percentage in the case of cost-plus pricing?

A) Target annual operating income / Invested capital

B) Estimated annual dividend / Invested capital

C) Target sales revenue / Target annual operating income

D) Estimated annual dividend / Target annual operating income

 

4) The markup percentage is most likely to be the lowest while using ________ as the cost base.

A) variable manufacturing cost

B) variable cost of the product

C) manufacturing cost

D) full cost of the product

 

5) Samuels Company is considering pricing its 10,000-gallon petroleum tanks using either variable manufacturing or full product costs as the base. The variable cost base provides a prospective price of $6,000 and the full cost base provides a prospective price of $6,100. The difference between the two prices is ________.

A) the estimated amount of profit

B) that the variable cost base estimates fixed costs in the markup percentage while the full cost base includes an amount for fixed costs

C) known as price discrimination

D) caused by the inability of most companies to estimate fixed cost per unit with any degree of reliability

6) Which of the following can be used to arrive at the target rate of return on investment?

A) dividing target annual operating income by invested capital

B) multiplying target annual operating income by the rate of fixed preference dividend

C) dividing invested capital by estimated dividend rate

D) multiplying earnings available to equity stakeholders by price-equity ratio

 

7) The amount of markup percentage is usually higher if ________.

A) there is idle capacity

B) demand is strong

C) competition is intense

D) demand is elastic

 

8) When making pricing decisions managers should include fixed cost per unit in the cost because ________.

A) it leads to reporting higher operating income for the period

B) it allows managers to report positive contribution as long as prices are above variable costs

C) in the long run, the price of a product must exceed the full cost of the product

D) it requires the management accountant to perform a detailed analysis of cost-behavior patterns to separate product costs into variable and fixed components

 

 

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more