Managerial Accounting Quiz

In most cases, a company sets the selling price instead of it being set by the competitive market.

• TRUE

• FALSE

In a competitive market, a company is forced to act as a price taker and must emphasize minimizing and controlling costs.

• TRUE

• FALSE

The difference between the target selling price and the desired profit is the target cost of the product.

• TRUE

• FALSE

In a competitive environment, the company must set a target cost and a target selling price.

• TRUE

• FALSE

The cost-plus pricing approach establishes a cost base and adds a markup to this base to determine a target selling price.

• TRUE

• FALSE

The cost-plus pricing model gives consideration whether demand will dictate that customers pay the target selling price.

• TRUE

• FALSE

Sales volume plays a large role in determining unit costs in the cost-plus pricing approach.

• TRUE

• FALSE

In time-and-material pricing, the material charge is based on the cost of direct materials used and a material loading charge for related overhead costs.

• TRUE

• FALSE

The first step in time-and-material pricing is to calculate the material loading charge.

• TRUE

• FALSE

The material loading charge is expressed as a percentage of the total estimated cost of materials for the year.

• TRUE

• FALSE