Test Bank for Managerial
Accounting: Tools for Business
Decision Making
Target Costing - ANSWERSSetting price based on cost and profit in competitive markets
Total Cost-Plus Pricing - ANSWERSStrategy setting price based on cost and desired return on
investment
Target Cost - ANSWERSCost yielding desired profit when seller doesn't control price
Time-and-Material Pricing - ANSWERSDetermining service cost based on time and materials
used
Transfer Price - ANSWERSPrice set using negotiated, cost-based, or market-based
approaches
Market Price - ANSWERSPrice determined by supply and demand in competitive markets
Price Taker - ANSWERSFirm accepting market price due to lack of control
Price Maker - ANSWERSFirm setting price independently of market forces
Markup Percentage - ANSWERSPercentage added to cost to determine selling price
Market Niche - ANSWERSSegment a company competes in, like luxury or economy goods
Desired Profit - ANSWERSProfit goal to be achieved through pricing strategies
Variable Cost - ANSWERSCost changing with production volume
, Fixed Cost - ANSWERSCost remaining constant regardless of production volume
Return on Investment (ROI) - ANSWERSProfit earned as a percentage of investment
Absorption Cost-Plus Pricing - ANSWERSPricing covering manufacturing costs and target ROI
Cost Base - ANSWERSIncludes only manufacturing costs in pricing calculations
Manufacturing Cost per Unit - ANSWERSTotal cost per unit including direct materials, labor,
and overhead
Absorption Cost - ANSWERSTotal manufacturing cost per unit, including fixed and variable
costs
SG&A Expenses - ANSWERSSelling, General, and Administrative expenses
ROI - ANSWERSReturn on Investment, a measure of profitability
Target Selling Price - ANSWERSPrice set to achieve a desired profit margin
Variable Cost per Unit - ANSWERSCost per unit including variable costs only
Fixed Costs - ANSWERSCosts that do not vary with production or sales volume
Variable Cost-Plus Pricing - ANSWERSPricing method based on variable costs plus target ROI
Cost-Volume-Profit Analysis - ANSWERSAnalysis of the effects of sales volume, costs, and
prices on profit
Accounting: Tools for Business
Decision Making
Target Costing - ANSWERSSetting price based on cost and profit in competitive markets
Total Cost-Plus Pricing - ANSWERSStrategy setting price based on cost and desired return on
investment
Target Cost - ANSWERSCost yielding desired profit when seller doesn't control price
Time-and-Material Pricing - ANSWERSDetermining service cost based on time and materials
used
Transfer Price - ANSWERSPrice set using negotiated, cost-based, or market-based
approaches
Market Price - ANSWERSPrice determined by supply and demand in competitive markets
Price Taker - ANSWERSFirm accepting market price due to lack of control
Price Maker - ANSWERSFirm setting price independently of market forces
Markup Percentage - ANSWERSPercentage added to cost to determine selling price
Market Niche - ANSWERSSegment a company competes in, like luxury or economy goods
Desired Profit - ANSWERSProfit goal to be achieved through pricing strategies
Variable Cost - ANSWERSCost changing with production volume
, Fixed Cost - ANSWERSCost remaining constant regardless of production volume
Return on Investment (ROI) - ANSWERSProfit earned as a percentage of investment
Absorption Cost-Plus Pricing - ANSWERSPricing covering manufacturing costs and target ROI
Cost Base - ANSWERSIncludes only manufacturing costs in pricing calculations
Manufacturing Cost per Unit - ANSWERSTotal cost per unit including direct materials, labor,
and overhead
Absorption Cost - ANSWERSTotal manufacturing cost per unit, including fixed and variable
costs
SG&A Expenses - ANSWERSSelling, General, and Administrative expenses
ROI - ANSWERSReturn on Investment, a measure of profitability
Target Selling Price - ANSWERSPrice set to achieve a desired profit margin
Variable Cost per Unit - ANSWERSCost per unit including variable costs only
Fixed Costs - ANSWERSCosts that do not vary with production or sales volume
Variable Cost-Plus Pricing - ANSWERSPricing method based on variable costs plus target ROI
Cost-Volume-Profit Analysis - ANSWERSAnalysis of the effects of sales volume, costs, and
prices on profit
