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Cost Management And Pricing Decisions MCQs

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1

In cost-plus pricing, the ‘plus’ refers to a component named as __________?

Option A: off shore cost

Option B: markup

Option C: sunk cost

Option D: outsource cost

Correct Answer: markup ✔


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2

The product costing technique in which markup component is added into cost base, to set a target price is known as __________?

Option A: market based approach

Option B: cost incurrence pricing

Option C: cost plus pricing

Option D: locked-in cost pricing

Correct Answer: cost plus pricing ✔


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3

The process which leads to disassembling and analysis of competitors, operating activities to become acquainted with competitors’ technologies is called __________?

Option A: outsource engineering

Option B: reverse engineering

Option C: target engineering

Option D: off shore engineering

Correct Answer: reverse engineering ✔


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4

The practice of seller to charge higher price for same market offering is classified as __________?

Option A: peak-load pricing

Option B: elastic pricing

Option C: elastic demand

Option D: inelastic demand

Correct Answer: peak-load pricing ✔


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5

The systematic evaluation of value chain, to reduce costs and high quality, to achieve satisfied customers is known as __________?

Option A: reverse engineering

Option B: value engineering

Option C: target engineering

Option D: operation engineering

Correct Answer: value engineering ✔


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6

An income, which a company aims to earn by selling each unit of market offering is classified as __________?

Option A: target operating income per unit

Option B: target cost per unit

Option C: total current full cost

Option D: total cost per unit

Correct Answer: target operating income per unit ✔


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7

The kind of cost which on elimination, would not reduce the perceived usefulness that customers can obtain by using the market offering is known as __________?

Option A: designed-in costs

Option B: locked-in costs

Option C: value added cost

Option D: non-value added cost

Correct Answer: value added cost ✔


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8

The concept, which states that resources are used to meet particular goals is __________?

Option A: cost incurrence

Option B: valued incurrence

Option C: locked incurrence

Option D: non valued incurrence

Correct Answer: cost incurrence ✔


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9

An insensitivity of demand in relevance to change in price will be called __________?

Option A: demand elasticity

Option B: price elasticity

Option C: price inelasticity

Option D: demand inelasticity

Correct Answer: demand inelasticity ✔


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10

An estimated price, which is expected to be paid by customers for particular market offering is classified as __________?

Option A: target price

Option B: target cost

Option C: outsource price

Option D: off shore price

Correct Answer: target price ✔


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11

The costs that are planned in future and has not been incurred are known as __________?

Option A: designed-in costs

Option B: locked-in costs

Option C: value added cost

Option D: both a and b

Correct Answer: designed-in costs ✔


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12

If cost is eliminated, then reducing the perceived usefulness that customers can obtain by using the market offering will come under __________?

Option A: designed-in costs

Option B: locked-in costs

Option C: value added cost

Option D: non-value added cost

Correct Answer: value added cost ✔


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13

The practice by seller, about offering same product at different prices, to the different customers is known as __________?

Option A: price incurrence

Option B: price discrimination

Option C: price targeting

Option D: price engineering

Correct Answer: price discrimination ✔


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14

A technique, which accumulates and tracks the costs of business function in value chain attributed to each market, offering from R&D to final customer support, is called __________?

Option A: product life cycle

Option B: life cycle budgeting

Option C: life cycle costing

Option D: target costing

Correct Answer: life cycle costing ✔


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15

If total production is 25000 units and target annual operating income is $300000, then target operating income per unit would be __________?

Option A: $15

Option B: $12

Option C: $16

Option D: $18

Correct Answer: $12 ✔


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16

The total cost incur by customer to use, acquire, maintain and dispose service or product is classified as __________?

Option A: budgeted life cycle

Option B: targeted life cycle

Option C: customer life cycle

Option D: operating life cycle

Correct Answer: customer life cycle ✔


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17

The pricing method used by services companies, such as home repair services, architectural firms and automobile repair services is known as __________?

Option A: product life cycle method

Option B: life cycle budgeting method

Option C: life cycle costing method

Option D: time and material method

Correct Answer: time and material method ✔


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18

The span time from initial research and development of product till support and customer service, if not offered for that particular product will be called __________?

Option A: product life cycle

Option B: life cycle budgeting

Option C: life cycle costing

Option D: target costing

Correct Answer: product life cycle ✔


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19

If the invested capital is $150000 and target rate of return on investment is 16%, then the targeted annual operating income would be __________?

Option A: $27,000

Option B: $26,000

Option C: $24,000

Option D: $25,000

Correct Answer: $24,000 ✔


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20

The major influential factors on supply and demand include __________?

Option A: customers

Option B: costs

Option C: competitors

Option D: all of above

Correct Answer: customers ✔


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21

The technique, which accumulates and tracks revenues of business function in value chain attributed to each market offering from R&D to final customer support is called __________?

Option A: product life cycle

Option B: life cycle budgeting

Option C: life cycle costing

Option D: target costing

Correct Answer: life cycle budgeting ✔


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22

The companies that perform in less competitive markets and their market offerings significantly differ are classified as __________?

Option A: independent revenue approach

Option B: market based approach

Option C: cost based approach

Option D: dependent revenue approach

Correct Answer: cost based approach ✔


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23

The major approaches to make decisions about pricing include __________?

Option A: market based

Option B: sunk cost

Option C: cost based

Option D: both a and c

Correct Answer: both a and c ✔


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24

The companies that perform in competitive markets using the pricing approach are known as __________?

Option A: independent revenue approach

Option B: market based approach

Option C: dependent revenue approach

Option D: cost based approach

Correct Answer: market based approach ✔


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25

The selection of target price, understanding customer requirements, improving product designs and use of cross functional teams are considered as aspects of __________?

Option A: target pricing

Option B: target costing

Option C: value engineering

Option D: all of above

Correct Answer: all of above ✔


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26

The target price is subtracted from per unit target operating income to calculate __________?

Option A: total current full cost

Option B: total cost per unit

Option C: target operating income per unit

Option D: target cost per unit

Correct Answer: target cost per unit ✔


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27

An estimated cost per unit in long run, which enables the company to achieve it’s per unit target, operating income is classified as __________?

Option A: target operating income per unit

Option B: target cost per unit

Option C: total current full cost

Option D: total cost per unit

Correct Answer: target cost per unit ✔


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28

If the cost base is $350 and the markup component is 11% then prospective selling price will be __________?

Option A: 388.5

Option B: 350

Option C: 362

Option D: 368.5

Correct Answer: 388.5 ✔


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29

The target annual operating income is divided with invested capital to calculate __________?

Option A: target rate of return on investment

Option B: operating income per unit

Option C: operating cost per unit

Option D: cost of goods sold

Correct Answer: target rate of return on investment ✔


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