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Tuesday, February 8, 2011

Managerial Accounting

Solution is available here for U$6

16. If the target profit is $60,000 for a volume of 480 units, fixed costs are $168,000, and the variable cost per unit is $450, then the markup percentage on variable cost would be:
A) 104.56%.
B) 105.56%.
C) 106.00%.
D) 106.45%.
E) some other amount.

17. Which of the following is (are) a key feature of target costing?
A) The use of cross-functional teams.
B) A focus on the customer.
C) A focus on product design.
D) A focus on process design.
E) All of the above.

18. Which of the following management tools is a key component of target costing?
A) Management simulation.
B) Linear programming.
C) Value engineering.
D) Goal programming.
E) Performance reporting systems.

19. With the time and material pricing method, the hourly time charge is typically set equal to:
A) the hourly labor cost.
B) the hourly labor cost + annual overhead.
C) the hourly labor cost + an hourly overhead charge + an hourly charge to cover the profit margin.
D) annual overhead + an hourly charge to cover the profit margin.
E) the hourly labor cost + an hourly charge to cover the profit margin.

20. If a firm has excess capacity, which of the following is a sensible bidding strategy?
A) Set a price to cover all costs.
B) Base the bid on the incremental costs incurred because the job will contribute toward the company's profit.
C) Base the bid solely on direct labor hours. D) Downplay the potential impact of competitors. E) Allocate common fixed costs to individual jobs before preparing the bid.

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