Question : 61) N-C Associates in the process of evaluating its new client : 1196078

 

61)

N-C Associates is in the process of evaluating its new client services for the business consulting division. Estate Planning, a new service, incurred $600,000 in development costs and employee training. The direct costs of providing this service, which is all labour, averages $100 per hour. Other costs for this service are estimated at $2,000,000 per year. The current program for estate planning is expected to last for two years. At that time a new law will be in place which will require new operating guidelines for the tax consulting. Customer service expenses average $400 per client, with each job lasting an average of 400 hours. The current staff expects to bill 40,000 hours for each of the two years the program is in effect. Billing averages $140 per hour.

What is the life-cycle budgeted revenue? 61)

______ A)

$22,400,000 B)

$28,500,00 C)

$8,000,000 D)

$6,400,000 E)

$11,200,000

62)

Nicholas, Critelli and Associates is in the process of evaluating its new client services for the business consulting division. Estate Planning, a new service, incurred $600,000 in development costs and employee training. The direct costs of providing this service, which is all labour, averages $100 per hour. Other costs for this service are estimated at $2,000,000 per year. The current program for estate planning is expected to last for two years. At that time a new law will be in place which will require new operating guidelines for the tax consulting. Customer service expenses average $400 per client, with each job lasting an average of 400 hours. The current staff expects to bill 40,000 hours for each of the two years the program is in effect. Billing averages $140 per hour.

What is the life-cycle operating income? 62)

______ A)

$(1,480,000) B)

$12,000,000 C)

$11,200,000 D)

$(1,400,000) E)

$3,200,000

63)

The life-cycle reporting process 63)

______ A)

is used only when yearly costs are not definable. B)

matches the company’s normal fiscal year reporting. C)

is the same as traditional accounting reporting. D)

usually includes several accounting reporting periods. E)

tracks costs, but not revenues, from the beginning to the end of a product’s, or service’s life.

64)

Which of the following is TRUE concerning Life cycle budgeting? 64)

______ A)

It highlights only costs for the life cycle. B)

It obscures revenues in minor business functions. C)

It helps in setting prices to cover costs in all business functions. D)

It has a calendar year focus. E)

It assumes that selling price is the same over the life cycle of the product.

65)

Important benefits of life cycle reporting include all of the following EXCEPT: 65)

______ A)

differences between products in the percentage of their total costs incurred at earl stages in the life cycle are highlighted. B)

Upstream costs, such as R & D, are the only costs that are need to be added in when a life cycle report is complete. C)

the full set of revenues associated with each product becomes visible. D)

the full set of costs associated with each product becomes visible. E)

Interrelationships among business function cost categories are highlighted.

66)

Which of the following is TRUE of products with a long life cycle? 66)

______ A)

They highlight the interrelationships with other parts of the life-cycle. B)

Their costs are more difficult to manage. early in their life-cycle. C)

They are highly visible and therefore must be carefully controlled. D)

It is not as important to have accurate predictions of revenues. E)

A small fraction of the total life costs are actually incurred at the time when costs are locked-in.

67)

Customer life-cycle costs 67)

______ A)

are the same as the selling life-cycle prices. B)

focus on marketing costs. C)

are the costs the selling company incurs to satisfy the customer. D)

are the costs to the customer of buying and using a product until it is replaced E)

are the replacement costs of using a product or service.

68)

Predatory pricing is a type of price discrimination that 68)

______ A)

deliberately sets prices very low, sometimes even below costs, so as to minimize competition. B)

allows prices to be cut to the level of variable costs. C)

is required when a company declares bankruptcy so that it can sell its remaining goods quickly. D)

actually ensures more supply access as high prices reduce demand. E)

is used in the food industry for perishable goods.

69)

To minimize the chances of violating pricing laws, a company should 69)

______ A)

maintain records that permit easy compilation of variable costs. B)

ensure that prices do not exceed variable costs plus fixed costs. C)

use a variable cost plus markup method of pricing. D)

keep a record of the upstream costs associated with low cost products. E)

use dumping only when a product is at the end of its life-cycle.

70)

Collusive pricing occurs when 70)

______ A)

two or more companies agree to sell a product at a price higher than should be expected. B)

one large company dominates an industry. C)

a company wants two products to sell for the same, or almost the same, amount. D)

competitors are part of the same large parent organization. E)

a company wants a product to sell for the same as a competitor’s product.