Pricing Decisions And Cost Management

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Question 1
Free
Multiple Choice

As a general rule of economics, companies should only produce and sell units as long as ________ .

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A

there is customer demand for the product

B

there is a relatively small supply of the product when compared to past operating periods

C

the revenue from an additional unit exceeds the cost of producing it

D

there is a generous supply of low-cost direct materials

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Question 2
Free
Multiple Choice

In setting prices for products and services, managers may attempt to charge what the customer is willing to pay however, too high a price may ________ .

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A

deter a customer from purchasing a product and seek alternatives

B

increase demand and demand for the product

C

indicate supply is too plentiful

D

decrease a competitor's market share

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Question 3
Free
Multiple Choice

Companies must always examine their pricing ________ .

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A

based on the supply of the product

B

based on the full cost of producing the product and price to make a profit

C

through the eyes of their customers and then manage costs to produce a profit

D

based on the GAAP cost of producing the product and then add a mark-up

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Question 4
Free
Multiple Choice

Which of the following statements is true about the factors that affect pricing decisions?

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A

Information about competitors' technologies is not useful for pricing decisions.

B

Information about a competitor in a perfect market affects pricing decisions.

C

Increase in price of a substitute product does not affect pricing decisions.

D

Managers must always be aware of the competition when pricing their products

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Question 5
Free
Multiple Choice

In a perfectly competitive market, which of the following is a primary factor influencing pricing decisions?

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A

cost of production

B

availability of raw materials in the market

C

information on competitor's cost structure

D

value customers place on product

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Question 6
Multiple Choice

Which of the following statements is true of the cost of producing a product?

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A
It controls pricing in highly competitive markets.
B
It affects the willingness of a company to supply a product.
C
It includes manufacturing costs, but not product design costs for pricing decisions.
D
It is not a factor to be taken into account while pricing a product.
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Question 7
Multiple Choice

In a noncompetitive environment, the key factor affecting pricing decisions is the ________ .

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A
customer's willingness to pay
B
price charged for alternative products
C
information on competitor's cost structure
D
minimum price acceptable to the firm
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Question 8
Multiple Choice

Which of the following statements is true of costs and pricing decisions?

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A
Companies get profit from selling products only when they are the price makers.
B
Companies supply products as long as the price the customer is willing to pay for its products exceeds the price that is charged by the competitor.
C
Companies supply products as long as there is a demand for the product in the market regardless of the price at which the products are sold.
D
Companies supply products as long as the revenues from selling the additional units exceed the cost of producing them.
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Question 9
Multiple Choice

Three major influences on pricing decisions are ________ .

Choose correct answer/s
A
competition, costs, and customers
B
competition, demand, and production efficiency
C
continuous improvement, customer satisfaction, and supply
D
variable costs, fixed costs, and mixed costs
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Question 10
True/False

Monopolists can charge prices without limitations as there is no competition for the product or service the monopolist provides.

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True
False
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Question 11
True/False

A company operating in a perfectly competitive market has more leeway to set higher prices than a firm that is a monopolist.

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True
False
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Question 12
True/False

For a company operating in a perfectly competitive market, cost information affects the pricing decisions of the company.

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True
False
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Question 13
True/False

Fluctuations in exchange rates between different countries' currencies affect costs and pricing decisions of a company.

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True
False
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Question 14
True/False

In markets with little or no competition, the key factor affecting price is the cost of production to the company.

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True
False
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Question 15
True/False

The value customers place on a product and the prices charged for competing products affect demand and the cost of producing and delivering the product affect supply.

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True
False
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Question 16
True/False

If U.S dollar strengthens against the Japanese Yen, Japanese producers selling goods in U.S markets will have to increase the prices of products to recover the extra cost arising from currency fluctuation.

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True
False
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Question 17
Essay

Claudia Geer, controller, discusses the pricing of a new product with the sales manager, James Nolan. What major influences must Claudia and James consider in pricing the new product? Discuss each briefly.

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Question 18
Multiple Choice

Which of the following examples would have as its purpose the allocation of costs to motivate employees?

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A
deciding on a selling g price for a product
B
encouraging sales representatives to emphasize high-margin products
C
to cost products a a "fair" price under a government contract
D
to cost inventories for reporting to external parties
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Question 19
Multiple Choice

Which of the following are true regarding long-run pricing decisions?

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A
they result in maximizing return on investment
B
they include adjusting product mix in a competitive environment
C
the price needs to be sufficient enough to break-even
D
use prices that include a reasonable return on invested capital
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Question 20
Multiple Choice

Which of the following is true of long-run pricing?

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A
It is fixed at a level that recovers the variable cost of the company and a pre-determined profit markup.
B
It is generally a function of the market factors and the cost involved in production is generally not a consideration.
C
It is a strategic decision designed to build long-run relationships with customers based on stable and predictable prices.
D
It is based only on internal requirements like cost and estimated rate of return as in the long run these requirements are the driving factors of any organization.
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