TEST 1 CH 11-13
NAME DATE ______________________________________ __________
MULTIPLE CHOICE
1.. Companies should ONLY produce and sell units as long as c. the revenue from an additional unit exceeds the cost of producing it. 2. Too high a price may a. deter a customer from purchasing a product. 3. Companies must ALWAYS examine pricing c. through the eyes of their customers.
4. Value-added costs c. are reduced through improved efficiencies. 5. Three major influences on pricing decisions are a. competition, costs, and customers. 6. Relevant costs for pricing a special order include c. additional setup costs for the special order.
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 7 AND 8.
Northwoods manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $120 per table, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Northwoods’ policy to add a 50% markup to full costs.
7. Northwoods is invited to bid on a one-time-only special order to supply 200 rustic tables. What is the lowest price Northwoods should bid on this special order? d. $14,400
8. A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Northwoods is invited to submit a bid to the hotel chain. What per unit price will Northwoods MOST likely bid on this long-term order? c. $180 per unit 9. Price discrimination is the practice of d. charging different prices to different customers or clients for the same products or services.
10. Feedback regarding previous actions may affect d. all of the above.
11. In evaluating different alternatives, it is useful to concentrate on Answer is relevant cost
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 12 THROUGH 14.
Welch