Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 15, Problem 27RQ
Briefly explain the potential negative consequences in pricing decisions from using a traditional, volume-based product-costing system.
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Why functional (or volume)- based costing approaches may produce distorted costs.
Briefly explain the potential negative consequences in pricing decisions from using a traditional, volumebased product-costing system.
Briefly explain two factors that tend to result in product cost distortion under traditional, volume-based product costing systems.
Chapter 15 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - List and briefly describe four major influences on...Ch. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Define the following terms: total revenue,...Ch. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Prob. 11RQCh. 15 - List the four common cost bases used in cost-plus...Ch. 15 - List four reasons often cited for the widespread...Ch. 15 - What is the primary disadvantage of basing the...Ch. 15 - Prob. 15RQCh. 15 - Prob. 16RQCh. 15 - Prob. 17RQCh. 15 - Explain the phrase price-led costing.Ch. 15 - Prob. 19RQCh. 15 - Prob. 20RQCh. 15 - Could tear-down methods be used effectively for...Ch. 15 - Briefly describe the time-and-material pricing...Ch. 15 - Explain the importance of the excess-capacity...Ch. 15 - Prob. 24RQCh. 15 - Describe the following approaches to pricing new...Ch. 15 - Prob. 26RQCh. 15 - Briefly explain the potential negative...Ch. 15 - Prob. 28ECh. 15 - Prob. 29ECh. 15 - Prob. 30ECh. 15 - The marginal cost, marginal revenue, and demand...Ch. 15 - Prob. 32ECh. 15 - Refer to the cost and production data for the Wave...Ch. 15 - Prob. 35ECh. 15 - The following data pertain to Royal Lighting...Ch. 15 - Prob. 37ECh. 15 - Badger Valve and Fitting Company, located in...Ch. 15 - North American Pharmaceuticals, Inc. specializes...Ch. 15 - MPE, Inc. will soon enter a very competitive...Ch. 15 - Prob. 41PCh. 15 - Prob. 42PCh. 15 - Prob. 43PCh. 15 - Alexis Kunselman, president of Pharsalia...Ch. 15 - Southern Tier Heating, Inc. installs heating...Ch. 15 - Omaha Synthetic Fibers Inc. specializes in the...Ch. 15 - Prob. 47PCh. 15 - Prob. 48CCh. 15 - Zylar Industries is a manufacturer of standard and...
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- Although the cost-plus approach to product pricing may be used by management as a general guideline, what are some examples of other factors that managers should also consider in setting product prices?arrow_forwardDiscuss how financial data prepared on the basis of variable costing can assist management in the development of short-run pricing policies.arrow_forwardExplain how the high-low method is used for cost estimation. What, if any, are the limitations of this approach to cost estimation?arrow_forward
- Discuss the advantages and disadvantages of using a cost planning and control system based on earned value analysis (EVA) as opposed to more traditional cost planning and control approaches.arrow_forwardCost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. Are these assumptions always valid?arrow_forwardMarginal Costing is a technique of _____. a. Cost Reduction b. Cost Evaluation c. Cost Control d. Cost Measurementarrow_forward
- Explain why a costing system that uses a volume-based rate is likely to produce distorted productcostsarrow_forwardCost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. What assumptions are used in cost-volume-profit analysis?arrow_forwardDiscuss the importance of fixed cost and variable cost with respect to special orders. How might failure to identify a fixed cost impact the decision to accept or reject a special order?arrow_forward
- When a traditional, volume-based costing system is used, which of the following products is most likely to suffer from cost distortion? Select one. a. A low-volume, low-complexity product b. A high-volume, medium-complexity product CA low-volume, medium-complexity product d.A low-volume, high-complexity productarrow_forwardWhat type of cost drivers do modern costing systems use and how does it differ from the cost drivers used by traditional costing systems? List two aspects to consider when selecting cost drivers that are to be used for cost prediction purposes.arrow_forwardWhich of the following is not an application of cost-volume-profit analysis? Setting prices for products and services. Performing strategic “what-if” analyses. Deciding whether to cut a product line. Determining the short-term cost or profit implications of many decisions. Deciding whether to make or buy a given product or service.arrow_forward
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