Fluent Essays

The pricing objective of maximizing profits:       1 has not been affected by other, more socially focused concerns.        2 is to be implemented under any and all circumstances.        3 has not always been considered the underlying objective of any pricing policy.        4 must be considered when determining the price needed to increase market share. To stay in business, a company must have a selling price that is:       1 acceptable to the customer.        2 able to recover the variable costs of production.        3 the highest in the marketplace.        4 equal to or lower than the companys costs per unit. An internal issue to be considered when setting a price is:       1 whether the process is labor-intensive or automated.        2 the customers preferences for quality versus price.        3 current prices of competing products or services.        4 the life of the product or service. An external issue to be considered when setting a price is:       1 the variable costs of the product or service.        2 the desired rate of return.        3 the quality of materials and labor.        4 the number of competing products or services. Fixed costs that change for activity outside the relevant range would include:       1 supervision costs.        2 electricity costs.        3 production supplies costs.        4 raw materials costs. When gross margin pricing is used, the markup percentage includes:       1 desired profits plus total selling, general, and administrative expenses.        2 only the desired profit factor.        3 total costs and expenses.        4 desired profits plus total fixed production costs plus total selling, general, and administrative expenses. The return on assets pricing method:       1 has very little appeal and support.        2 has a primary objective of earning a minimum rate of return on assets.        3 is a crude approach to pricing and should be used as a last resort.        4 replaces the desired rate of return used in cost-based pricing methods with a desired profit objective. The pricing method that establishes selling prices based on a stipulated rate above total production costs is:       1 return on assets pricing.        2 target cost pricing.        3 gross margin pricing.        4 time and materials pricing. A major advantage of the target costing approach to pricing is that target costing:       1 allows a company to analyze the potential profit of a product before spending money to produce the product.        2 is not dependent on customers quality versus price decisions.        3 identifies unproductive assets.        4 anticipates the products profitability midway through its life cycle. Use of market transfer prices:       1 is the only acceptable approach in a free enterprise economy.        2 usually does not cause the selling division to ignore negotiating attempts by the buying division.        3 may cause an internal shortage of materials.        4 usually does not work against the operating objectives of the company as a whole. The variables to be considered in the capital investment decision are:       1 expected life, estimated cash flow, and investment cost.        2 expected life, estimated cost, and projected capital budget.        3 estimated cash flow, investment cost, and corporate objectives.        4 economic conditions, economic policies, and corporate objectives. Another term for the minimum rate of return is the:       1 payback rate.        2 discounted rate.        3 capital rate.        4 hurdle rate. The after-tax amount is used for which of the following components of the cost of capital?       1 Cost of debt        2 Cost of common stock        3 Cost of preferred stock        4 Cost of retained earnings Capital investment proposals should be ranked in decreasing order of:       1 length in years.        2 dollar amount required.        3 residual value expected.        4 rate of return. Which of the following items is irrelevant to capital investment analysis?       1 Investment cost        2 Residual value        3 Carrying value        4 Net cash flows The carrying value of a fixed asset is equal to its:       1 current disposal value.        2 current replacement cost.        3 original cost.        4 undepreciated balance. Which of the following items can be described as a noncash expense?       1 Wages        2 Advertising        3 Income taxes        4 Depreciation The time value of money concept is given consideration in long-range investment decisions by:       1 assuming equal annual cash flow patterns.        2 assigning greater value to more immediate cash flows.        3 weighting cash flows with subjective probabilities.        4 investing only in short-term projects. The net present value method of evaluating proposed investments:       1 discounts cash flows at the minimum rate of return.        2 ignores cash flows beyond the payback period.        3 applies only to mutually exclusive investment proposals.        4 measures a projects time-adjusted rate of return. The payback period is defined as the amount of time in years for the sum of:       1 future net incomes to equal the original investment.        2 net future cash inflows to equal the original investment.        3 net present value of future cash inflows to equal the original investment.        4 net future cash outflows to equal the original investment.The pricing objective of maximizing profits:1 has not been affected by other, more socially focusedconcerns.2 is to be implemented under any and all circumstances.3 has not always been...