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23 Nov 2019

Question 6

A company is trying to decide whether to sell partiallycompleted goods in their current state or incur additional costs tofinish the goods and sell them as complete units. Which of thefollowing is not relevant to the decision?

A)

The selling price of the completed units.

B)

The costs incurred to process the units to this point.

C) The selling price of thepartially completed units.

D) The costs that will be incurred to finish the units.

Question 7

YXZ Company’s market for the Model 55 has changed significantly,and YXZ has had to drop the price per unit from $275 to $135. Thereare some units in the work in process inventory that have costs of$160 per unit associated with them. YXZ could sell these units intheir current state for $100 each. It will cost YXZ $10 per unit tocomplete these units so that they can be sold for $135 each.
Which of the following is the amount of sunk costs in thisproblem?

A)

$160 per unit

B)

$10 per unit

C)

$125 per unit

D)

$100 per unit

Question 8

Ricket Company has 1,500 obsolete calculators that are carriedin inventory at a cost of $13,200. If these calculators areupgraded at a cost of $9,500, they could be sold for $22,500.Alternatively, the calculators could be sold “as is” for $9,000.What is the net advantage or disadvantage of reworking thecalculators?

A) $13,000 advantage

B) $4,000 advantage

C)

$9,200 disadvantage

D) $200 disadvantage

Question 9

Which is the proper order of steps in the target costingprocess?

A)

Analyze customer needs and wants, determine the desired profit,find the target cost, and design the product.

B)

Design the product, analyze customer needs and wants, determinethe desired profit, find the target cost.

C)

Analyze customer needs and wants, find the target cost, designthe product, determine the desired profit.

D)

Analyze customer needs and wants, determine the desired profit,design the product, find the target cost.

Question 10

Which of the following is not a valid criticism of cost pluspricing?

A) It is difficult to determine the appropriate markup.

B) The method is difficult.

C) The firm’s demand curve is ignored in setting the price andquantity.

D)

The method employs circular reasoning.

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Elin Hessel
Elin HesselLv2
23 Nov 2019
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