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Name_______________________________________
Acctg 202

Choose the best answer. 

1. Which of the following is not a major influence on pricing decisions? 
A) Planning and control policies of the firm. 
B) Customer demand. 
C) Costs. 
D) Competitors. 
E) Political, legal, and image-related issues. 

2. In a typical business, the firm's overall demand would be influenced by interactions among pricing policies and: 
A) the company's reputation. 
B) the quality of goods and services offered. 
C) competing goods and services. 
D) advertising and promotional campaigns. 
E) all of the above factors. 

3. 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. 

4. Under the time and material pricing method, a customer would be charged for: 
A) material costs. 
B) material and labor costs. 
C) material, labor, and overhead costs. 
D) material and labor costs, plus a profit margin. 
E) material, labor, and overhead costs, plus a profit margin. 

5. 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. 

6. What is price skimming? 
A) The initial price is set low and kept constant. 
B) The initial price is set low and then raised. 
C) The initial price is set high and later lowered. 
D) The initial price is set high and kept constant. 
E) The initial price is set high and then raised. 

7. Which of the following terms describes a pricing strategy in which a new product's initial price is set relatively low in order to gain a large market share? 
A) Penetration pricing. 
B) Price skimming. 
C) Customer pricing. 
D) Designed pricing. 
E) Market-share pricing. 

8. Which of the following pricing practices is illegal? 
A) Penetration pricing. 
B) Price skimming. 
C) Predatory pricing. 
D) Cost-based pricing. 
E) Market-share pricing. 

9. Beehler Company, which desires to enter the market with a new product, will perform the following tasks:

1óDesign and engineer the product.
2óDetermine the product's cost.
3óDetermine the desired profit margin.
4óDetermine the suggested selling price.

If Beehler uses target costing, which task would the company perform first? 
A) 1. 
B) 2. 
C) 3. 
D) 4. 
E) None of the above. 

10. Consider the following statements about time and material pricing:
I) The labor charge includes the direct cost of an employee's time.
II) The labor charge includes a charge to cover various overhead costs.
III) The material charge includes a handling charge for material.

Which of the above statements is (are) true? 
A) I. 
B) I and II. 
C) I and III. 
D) II and III. 
E) I, II, and III.

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