Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 13, Problem 13.16MCQ
Which of the following statements regarding price elasticity is incorrect?
- a. A product with a perfectly inelastic demand would have the same demand even as prices change.
- b. A product with a perfectly inelastic demand would see demand change as prices change.
- c. When demand is price elastic, lower prices stimulate demand.
- d. When demand is price elastic, higher prices reduce demand.
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Lowering price does not always increase revenue with increased demand. Besides reducing price, what else can a firm do to stimulate demand for its product?
A weakness associated with cost-based pricing methods is that they
do not allow for primary pricing.
infer a cost-price ratio.
do not allow for predatory pricing
are structurally inflexible and ignore vertical price fixing alternatives.
none of the above.
Distinguish between the downward demand spiral and the ramifications of this for price choices.
Chapter 13 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 13 - What are the three major influences on pricing...Ch. 13 - Relevant costs for pricing decisions are full...Ch. 13 - Describe four purposes of cost allocation.Ch. 13 - How is activity-based costing useful for pricing...Ch. 13 - Describe two alternative approaches to long-run...Ch. 13 - What is a target cost per unit?Ch. 13 - Describe value engineering and its role in target...Ch. 13 - Give two examples of a value-added cost and two...Ch. 13 - It is not important for a company to distinguish...Ch. 13 - Prob. 13.10Q
Ch. 13 - Describe three alternative cost-plus pricing...Ch. 13 - Give two examples in which the difference in the...Ch. 13 - What is life-cycle budgeting?Ch. 13 - What are three benefits of using a product...Ch. 13 - Prob. 13.15QCh. 13 - Which of the following statements regarding price...Ch. 13 - Value-added, non-value-added costs. The Magill...Ch. 13 - Target operating income, value-added costs,...Ch. 13 - Target prices, target costs, activity-based...Ch. 13 - Target costs, effect of product-design changes on...Ch. 13 - Target costs, effect of process-design changes on...Ch. 13 - Cost-plus target return on investment pricing....Ch. 13 - Cost-plus, target pricing, working backward....Ch. 13 - Life-cycle budgeting and costing. Arnold...Ch. 13 - Considerations other than cost in pricing...Ch. 13 - Cost-plus, target pricing, working backward. The...Ch. 13 - Value engineering, target pricing, and target...Ch. 13 - Target service costs, value engineering,...Ch. 13 - Cost-plus, target return on investment pricing....Ch. 13 - Cost-plus, time and materials, ethics. C S...Ch. 13 - Cost-plus and market-based pricing. Georgia Temps,...Ch. 13 - Cost-plus and market-based pricing. (CMA, adapted)...Ch. 13 - Life-cycle costing. Maximum Metal Recycling and...Ch. 13 - Airline pricing, considerations other than cost in...Ch. 13 - Prob. 13.35PCh. 13 - Ethics and pricing. Instyle Interior Designs has...Ch. 13 - Value engineering, target pricing, and locked-in...
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- When is the material quantity unfavorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard pricearrow_forward!arrow_forwardIs it impossible when the new sales price is higher than the original price if we remove tariff. -the quantity of firm A and B is higher when the firm C remove tariff, and the quantity of firm C decrease.arrow_forward
- Which of the following is not an underlying assumption of a conventional CVP analysis? Multiple Choice Selling price per unit is unrelated to assumed sales volume. Inputs to the profit-planning model are known with certainty. Learning-curve effects (i.e., productivity gains with experience). Fixed costs, in total, do not change as sales mix or total sales volume change. Variable costs per unit are unrelated to changes in volume.arrow_forwardGiven the weaknesses of cost-based pricing, why wouldany company use this method?arrow_forwardCompetition-based pricing is a variation of break-even pricing. True O False Carrow_forward
- Which of the following statements best illustrates the difference between a Giffen good and a Veblen good? a. The Giffen good alone is an inferior good b. The Veblen good alone has a positively sloped demand curve c. the subsititution effect for each is in opposite directionarrow_forwardWhich of the following measures how responsive demand will be to a change in price? Question 5 options: A) Pricing adjustment B) Demand extension C) Price elasticity D) Demand curvearrow_forwardWhether the firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces must be considered. True Falsearrow_forward
- 2. Which of the following is not one among the limitations of EOQ? a. All the related components must be the actual values. b. Usage rate is assumed to be constant over time. c. Ignores the possible purchase discount for large volume of purchas. d. Suppliers can fill the purchase orders without any delay.arrow_forwardif we produce goods over the capacity, should we consider the fixed marketing cost and variable marketing cost when making the decision to accept or reject a special offer?arrow_forwardWhich of the following statements regarding assumptions and limitations of CVP analysis is not correct? Multiple Choice If unit prices change (for example, if the unit prices are lower for higher volumes), CVP analysis cannot be used. CVP analysis relies on certain assumptions and these assumptions might limit the applicability of the results for decision making. CVP analysis is a tool that the manager can use to help with decisions. The assumptions of constant unit variable cost and constant unit prices for all levels of volume as important limitations of CVP analysis. The limitations are due to the assumptions that the cost analyst makes; that is, they are not inherent limitations to the method of CVP analysis itself.arrow_forward
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