GB560 Unit 6 Paper (4 pages max)

Question
GB560 Unit 6 Paper (no more than 4 pages) Individual Project
This is a separate paper from the paper you prepared in Units 1-5. In this Assignment you will provide a critical analysis of the Business Process Change document you prepared and submitted in Units 1-5. The final document should be prepared in APA format (cover page, abstract, body, citations and references). The body of the final document addressing the questions below should be no less than 4 full pages of double-spaced text

Attached:

1. Assignment description

2. Grading rubric

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TAMUC MKT521 Final exam

Question
Part 1: Multiple Choice (2 pts. each)

Choose the correct/best answer.

Question 1.1. When Chase Bank mails a 30-day offer for a new pre-approved credit card with a $2,000 limit to a college student, this is an example of ___________.

(Points : 2)

direct-response promotion

integration

publicity

indirect-response promotion

mass selling

Question 2.2.

A flexible-price policy is most likely to be set by a retailer selling ____________.

(Points : 2)

milk

luxury purse like Louis Vuitton

warranty contract

cars

women’s shoes

Question 3.3. Which of the following statements might result from a performance analysis? (Points : 2)

Star Dancing’s sales are over her quota.

Kim Kard sold more aluminum tubing than steel tubing.

Oscar Award sold less tubing to wholesalers than to manufacturers.

Lucky Charm calls on two of our three biggest customers.

Our top New Jersey sales person sold more aluminum tubing than any of our other sales representatives.

Question 4.4. Most airlines try to get business travelers or the “cream” of a market (i.e., the top of a demand curve) at a high price before aiming at the more price-sensitive customers. This is consistent with a(an) ____________. (Points : 2)

Flexible-price policy

Sales-oriented pricing policy

Skimming pricing policy

Introductory price dealing policy

Penetration pricing policy

Question 5.5. Averages are useful for summarizing data but only analyzing “averages” may be misleading according to __________________. (Points : 2)

the “iceberg principle”

AIDA

“80/20” rule

hypothesis-testing theory

the “50/50” rule

Question 6.6. Channel systems in which the various channel members make little or no effort to cooperate with each other are called ______________ systems.

(Points : 2)

traditional channel

vertically integrated

direct-to-customer channel

franchising

administered channel

Question 7.7. Branding is good for some consumers because it ___________. (Points : 2)

makes shopping easier

provides dependable guides to product quality

helps assure regular satisfaction

connects the product with the benefits the consumer expects

All of these alternatives are correct.

Question 8.8. Josh Adams runs a large cattle farm in Texas. In order to take advantage of higher prices for beef in Europe compared to the United States, he has started selling cattle overseas by using an agent wholesaler who specializes in finding European customers for U. S. firms. He ships the cattle to Europe by water transport. Josh is involved in _________.

(Points : 2)

Exporting

Management contracting

Licensing

Joint venturing

None of the above.

Question 9.9. When developing a good promotion blend, a marketing manager should ____________.

(Points : 2)

be more concerned with persuading the target customers than informing or reminding

determine who the firm is trying to influence

realize that the right blend depends more on what customers expect than on what the firm wants to accomplish

All of the above are true.

None of the above are true.

Question 10.10. For dieters, the highest quality potato chips are probably ______________. (Points : 2)

chips made from all natural ingredients

chips with the best flavor

Gourmet Cape Cod Kettle Chips

chips that are low in fat and calories

any low-cost potato chip brand

Question 11.11.

Which of the following do firms using value pricing tend to avoid?

(Points : 2)

Setting a high price only because consumers already know the brand name.

Building a relationship with a customer which raises their expectations.

Delivering unexpected services which haven’t been stated to the customer.

Establishing a price level that gives the target market superior customer value.

Focusing on customer requirements and adopting a relevant marketing mix.

Question 12.12. Godiva, a maker of expensive European chocolates, does not mention price in its magazine advertising. Instead, the ad copy mentions the quality of the ingredients, the fine packaging, and the luxurious boutiques where Godiva chocolates are sold. Godiva seems to be pursuing a pricing objective of ______________. (Points : 2)

meeting competition

nonprice competition

target return

growth in market share

None of the above.

Question 13.13. Dec Ember Co. manufactures and sells tea, coffee, cosmetics, shoes, and sporting goods – all under the Dec Ember brand name. These products are ___________.

(Points : 2)

the firm’s product line

generic products

dealer brands

sold with a family brand

specialty products

Question 14.14.

With the “contribution-margin approach” to marketing cost analysis, ___________.

(Points : 2)

all costs are allocated to products, customers or other categories

fixed costs are allocated based on the profit contribution to the firm

variable costs are treated as common costs

common costs which are hard to allocate are ignored

None of the above.

Question 15.15. Which of the following statements illustrates the 80/20 rule? (Points : 2)

“80 percent of our target market doesn’t respond to our marketing mix, and we only have a 20 percent market share.”

“Of the hundred retailers who carry our products, the top twenty account for nearly 80 percent of our total business.”

“20 percent of our marketing effort is wasted, but we don’t know which 20 percent.”

“We don’t know whether our profits are 20 percent higher than we deserve, or only 80 percent of what might be easily obtained.”

None of the above.

Question 16.16. Sales of a producer’s wax paper food-wrap are declining fast. The advertising manager—looking for a way to attract attention to the brand—suggests changing the package somewhat and promoting it as a “new” product. The Federal Trade Commission ___________________.

(Points : 2)

would allow the company to call the product “new” for only six months

would not approve of this at all

would allow the advertising campaign if it concluded that consumers thought the different package made it new

does not regulate advertising, so it would not pay any attention to this firm

None of these alternatives is correct.

Question 17.17. A computer software company sent three computer magazines some information about the latest release of its popular software program. One of the magazines printed a story about the new version. This is an example of ________. (Points : 2)

personal selling

advertising

publicity

sales promotion

None of these is a good answer.

Question 18.18. The CBS network offers consumers hundreds of hours of television viewing each month, but the typical consumer wants to watch only a few programs. What type of discrepancy does this create? (Points : 2)

Discrepancy of assortment

Discrepancy of quality

Discrepancy of image

Discrepancy of variety

Discrepancy of quantity

Question 19.19. Which of the following does not relate to how control helps marketing managers learn? (Points : 2)

Control helps to plan for the future.

Control helps suggest which positions to eliminate.

Control helps to understand if implementation is working.

Control helps to evaluate if ongoing plans are working.

All of the above applies to the functions of control.

Question 20.20.

Kelly Drake, marketing manager for Find-Ur-Way global positioning systems, is testing the marketing mix for one of her company’s new products. The product was introduced in two different markets with different prices and packages. This suggests the new product was in the _________ step of the new-product development process.

(Points : 2)

commercialization

idea generation

development

screening

idea evaluation

Part 2: True/False (2 pts. each)

Answer whether the following statement is true or false.

Question 1.1. How quickly a new product will be accepted by customers and how quickly competitors will follow with their own version of a product are important factors when planning the best strategy for a new product. (Points : 2)

True

False

Question 2.2. Because too much sales data can drown a manager, it’s best to start by asking only for breakdowns that involve customer type. (Points : 2)

True

False

Question 3.3. In comparison with other promotion methods, sales promotion can neither be implemented quickly nor get results quickly.

(Points : 2)

True

False

Question 4.4. Marketing audits consider future marketing plans, so they are not concerned with a company’s current marketing strategies. (Points : 2)

True

False

Question 5.5. Some firms are forced to use direct distribution when they can’t find intermediaries willing to carry innovative, new products. (Points : 2)

True

False

Question 6.6. Direct-response promotion targets groups instead of individuals. (Points : 2)

True

False

Question 7.7. Communication often breaks down because the receiver’s decoded message is different than the message the source encoded.

(Points : 2)

True

False

Question 8.8. In the market introduction stage of the product life cycle, if a firm has economies of scale and expects competitors to enter the market soon, it would be wise to adopt a skimming pricing policy. (Points : 2)

True

False

Question 9.9. Because packaged products are regularly seen in retail stores, a good package may give a firm more promotion effect than it could possibly afford with advertising. (Points : 2)

True

False

Question 10.10. Experience shows that it doesn’t make sense for marketing managers to allocate costs to specific market segments or products.

(Points : 2)

True

False

Part 3: Essay (10 pts. each)

Discuss the following questions as thoroughly as posssible.

Question 1. 1. Mintu Inc. sells several different types of consumer products and the company attempts to introduce new products periodically. The CEO is a staunch believer of the traditional product life cycle (PLC). However, the current marketing manager believes that while the PLC can be an important tool, this does not mean that all products will follow the traditional PLC. Discuss how the marketing manager can convince the CEO of his/her point of view. (Points : 10)

Question 2. 2. In what ways do the other 3 Ps (of the marketing mix) affect price decisions? Discuss one effect of product, one effect of promotion and one effect of place on price decisions. (Points : 10)

Question 3. 3. The merger of American Airlines and US Airways brings to light legal concerns when horizontal arrangements between firms at the same level are made. Explain the basis for the legal issues. (Points : 10)

Question 4. 4. The “Google” name was initially supposed to be registered as “Googol.” However, during the registration process Sean Anderson misspelled the name to “Google.” Which name do you prefer – “Google” or “Googol”? Discuss two reasons why your prefered spelling is a good brand/company name. (Points : 10)

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TAMUC MKT521 midterm exam

Question
Multiple Choice – 20 questions (40 pts.)

Choose the appropriate answer.

Question 1.1.In which of the external environments changes usually occur most slowly?(Points : 2)

Cultural and social environment

Political and legal environments

Resources and objectives of the firm

Competitive environment

Economic and technological environments

Question 2.2.

Jersey G. wanted to start a decorating business. She identified several possible target markets, but decided to serve a market composed of recently married couples that owned their first home. Jersey appears to be following ____________.

(Points : 2)

mass marketing

multiple target market

combined target market

single target market

All of the above.

Question 3.3.MICRO-marketing effectiveness can be measured by ______________. (Points : 2)

the profits of business firms

the opinions of intermediaries

consumer complaints

attitude research studies

All of these are good measurements for MICRO-marketing.

Question 4.4.Mickey and Minnie Jones are preparing to purchase a new car. He currently has a Toyota Camry and she has a Honda Accord. They now have two children under age 5, so they plan to trade in Minnie’s car to purchase a minivan. Mickey and Minnie decided on a Honda Odyssey because Minnie is familiar with Hondas and thinks they are very reliable. In this purchase situation, Mickey and Minnie’s family life cycle stage is a _____________ segmenting dimension, and the benefit Minnie seeks (reliability) is a _____________ segmenting dimension.
(Points : 2)

geographic; demographic

demographic; behavioral

geographic; behavioral

demographic; geographic

behavioral; demographic

Question 5.5.Which of the following observations concerning planning strategies for international markets is false? (Points : 2)

A marketing manager should know that relying on intuition or personal experience may be misleading.

A marketing manager should know that understanding local cultural differences is of no real value.

A marketing manager should know that consumers in a foreign culture are probably bound by some similar cultural forces.

A marketing manager should involve locals who have a better chance of understanding the interests of customers.

A marketing manager should understand that many specific influences do not generalize from one culture to another.

Question 6.6.A producer of electrical components combined electrical supply wholesalers and manufacturers of electrical equipment into the same market segment, one of several segments it was targeting. Soon it lost the manufacturers’ business to a competitor. It seems that the firm failed to consider the risk of ______________________.

(Points : 2)

too much aggregating

insulting the manufacturers by putting them in the same market segment with the wholesalers

picking market segments based on qualifying dimensions

selecting market segments that were not substantial

using too many segmenting dimensions.

Question 7.7.Which of the following statements best describes the modern view of marketing? (Points : 2)

The job of marketing is to sell whatever the company is producing.

Marketing begins with anticipating potential customer needs.

Marketing should take over production, accounting, and financial services within a firm.

Marketing is concerned with generating a single exchange between a firm and a customer.

Production, not marketing, should determine what goods and services are to be developed.

Question 8.8.

From the perspective of macro-marketing, e-commerce specialists CarFax (which provides vehicle history reports) and Cars.com (a website offering auto comparison shopping) have emerged within the auto industry because _______________.

(Points : 2)

auto manufacturers need to sell direct to consumers

the market needs competitive rivals to auto dealerships

the information they provide makes the exchange process between producers and consumers more efficient and effective

the role of the automotive sales person is becoming obsolete

consumers live far distances from most automotive plants

Question 9.9.

A marketing manager should __________________.

(Points : 2)

know that most consumer complaints do not require a response because the consumer’s dissatisfaction is beyond the control of the firm

be concerned that many of the complaints that are reported are never resolved

recognize that many consumers who complain are trouble makers and that not much can or should be done about their complaints

assume that most customers who are dissatisfied will complain, but that people who are satisfied will be silent

recognize that a “complaint” box isn’t needed if the firm is really market-oriented in the first place

Question 10.10.When listening to music on the radio, many consumers automatically switch stations when commercials begin to run, and they search until they find another station that is playing music. This tendency is an example of _____________. (Points : 2)

selective exposure

selective perception

selective retention

selective learning

selective reception

Question 11.11.Prince wants to design a necklace he would like to give his girlfriend, Charming. Lately though, he has noticed that he is constantly “designing” the piece in his head. At times, he even dreams about the finished work. Prince is probably going through _________ behavior. (Points : 2)

compulsive

creative

subliminal

impulsive

rational

Question 12.12.A marketing analyst for a chicken processor reports that a rising percentage of people are eating chicken because it has less fat than beef. Clearly, this firm’s opportunities may improve with this change in the ______________.
(Points : 2)

technological environment

cultural and social environment

economic environment

political and legal environment

competitive environment

Question 13.13.The marketing management team for TAMUC Motors brainstormed a variety of solutions to the problem of how to transport people in the world. This process came during the __________ step in the market segmentation process.
(Points : 2)

disaggregating

market definition

segmenting

aggregating

approach selection

Question 14.14.An emphasis on a single country’s interests before everything else is known as __________. (Points : 2)

socialism

democracy

capitalism

nationalism

entrepreneurship

Question 15.15.When you are “in the market” for a new car, and are considering different brands to purchase, what type of market is involved? (Points : 2)

Product-market

Qualifying market

Generic market

Determining market

None of the above are true.

Question 16.16.A national restaurant chain encourages its customers to use its website as a means of providing comments about their experiences at the chain’s locations. This website is one way of measuring _______________. (Points : 2)

macro-marketing effectiveness

the effectiveness of competition

employee empowerment

micro-marketing effectiveness

All of these alternatives are correct.

Question 17.17.Which of the following would be the most difficult task facing a marketing manager?(Points : 2)

Discover the attitudes of the firm’s target market.

Create new attitudes toward his or her brand.

Promote existing attitudes.

Change existing negative attitudes.

Strengthen existing positive attitudes.

Question 18.18.Which of the following statements about marketing is FALSE?

(Points : 2)

Marketing affects the products you buy.

Marketing applies to nonprofit organizations too.

Marketing affects the advertising you see and hear.

Marketing offers many good job opportunities.

Marketing can help with individual transactions but not in building relationships with customers.

Question 19.19.Kim, a new salesperson for Basketball Foods, wants to call her ex-boyfriend Chris, another salesperson for Basketball Foods using the company provided cell phone. She is hoping to rekindle their past relationship. However, Kim knows that there is a strict company policy against using company equipment for personal use. But Kim also knows that no one checks the phone log for calls. This relates to __________ as an influence in ethical decision making. (Points : 2)

individual value system

opportunity

organizational relationships

insubordination

external punishment

Question 20.20.Good marketing managers know that ________________________. (Points : 2)

marketing strategies can’t influence consumer “wants”

marketers can’t create internal drives in consumers

it is not that difficult to develop a marketing strategy that gets consumers to do what they don’t want to do

None of these alternatives is correct.

All of the above are true.

True/False Section – 10 questions (20 pts.)

Indicate if the following statements are True or False.

Question 1.1.Managers are now applying a new screening criteria, sustainability, that reinforces the importance of meeting present needs without compromising the ability of future generations to meet their own needs.

(Points : 2)

True

False

Question 2.2.The “continuum of environmental sensitivity” suggests that industrial products are more sensitive to the cultural environments in which they are placed than high-style consumer products. (Points : 2)

True

False

Question 3.3.Estimating what price consumers are willing to pay for a product and if the firm can make a profit selling at that price, is an example of a production activity. (Points : 2)

True

False

Question 4.4.The legal environment sets the maximum standards of ethical behavior in a society. (Points : 2)

True

False

Question 5.5.Nike moved beyond shoes and sportswear to offer its athletic target market a running watch, digital audio player, and even a portable heart-rate monitor. This is an example of a market development strategy. (Points : 2)

True

False

Question 6.6.A firm usually has different strategy possibilities that it can pursue, so it must use screening criteria to help eliminate those strategies not well-suited to the firm. (Points : 2)

True

False

Question 7.7.Because almost all of the world’s population can read and write, international marketers have no problems in communicating with potential customers no matter where they live.
(Points : 2)

True

False

Question 8.8.Unfavorable trends in the domestic marketing environment may make the international marketing environment very attractive. (Points : 2)

True

False

Question 9.9.Qualifying dimensions are those that actually affect the customer’s purchase of a specific brand in a product-market. (Points : 2)

True

False

Question 10.10.A firm involved in international marketing should pay even more attention to segmenting than a firm that sells only in the United States. (Points : 2)

True

False

Essay Section – 4 questions (40 pts.)

Answer the following essay questions. Be as thorough as possible. Remember that this is a graduate level course, and expectations are as such.

Question 1.1.The first part of this MKT 521 course (Chaps. 1, 20, 2, 3, 4, 5) focused on understanding the target customer. Discuss the importance of this in relation to differentiation and positioning. (Points : 10)

Question 2.2.Explain how a SWOT analysis can direct a company’s R & D (research & development) efforts to create new products. (Points : 10)

Question 3Discuss the concept of segmentation within the context of the automotive industry in the US. That is, explain how segmentation is used by the automotive industry.(Points : 10)

Question 4.4.Briefly discuss the 2 approaches to consumer behavior. (Points : 10)

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Mardist Corporation has sales of $100,000, variable expenses of $75,000, fixed expenses

Question
1. Mardist Corporation has sales of ,000, variable expenses of $75,000, fixed expenses of $30,000,
and a net loss of $5,000. How much would Mardist have to sell to achieve a profit of 10% of sales?
A. $187,500
B. $225,500
C. $180,000
D. $200,000

2. Use the following information to answer this question.
Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has
compiled the following data for the past five months of operations.
Using the high-low method of analysis, the estimated variable cost per machine hour for electricity is
closest to which of the following?
Machine
Hours
Electrical
Cost
August 1,000 $1,620
September 900 $1,510
October 1,500 $1,870
November 2,000 $1,950
December 1,300 $1,730
A. $0.40
B. $1.68
C. $2.50
D. $0.98

3. Use the following information to answer this question.
Callaham Corporation is a wholesaler that sells a single product. Management has provided the following
cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit.
Sales volume (units)The best estimate of the total variable cost per unit is
4,000 5,000
Cost of sales $338,000 $422,500
Selling and administrative costs $89,600 $106,000
A. $84.50.
B. $105.70.
C. $106.90.
D. .90.

4. Viren Corporation has provided the following data from its activity-based costing system:
The company makes 240 units of product T91H a year, requiring a total of 550 machine hours, 90 orders,
and 40 inspection hours per year. The product’s direct materials cost is $16.98 per unit, and its direct labor
cost is $12.09 per unit. According to the activity-based costing system, the average cost of product T91H is
closest to _______ per unit.
Activity Cost Pool Total Cost Total Activity
Assembly $387,000 25,000 machine-hours
Processing orders $68,510 1,700 orders
Inspection $129,117 1,930 inspection-hours
A. $90.81
B. $75.70
C. $79.66
D. $29.07

5. Indiana Corporation produces a single product that it sells for $9 per unit. During the first year of
operations, 100,000 units were produced, and 90,000 units were sold. Manufacturing costs and selling and
administrative expenses for the year were as follows:
What was Indiana Corporation’s net operating income for the year using variable costing?
Fixed Costs Variable Costs
Raw materials $1.75 per unit
produced
Direct labor $1.25 per unit
produced
Factory
overhead ,000 $0.50 per unit
produced
Selling and
administrative $70,000 $0.60 per unit
sold
A. $371,000

B. $281,000
C. $271,000
D. $181,000

6. Use the following information to answer this question.
Harris Company produces a single product. Last year, Harris manufactured 17,000 units and sold 13,000
units. Production costs for the year were as follows:
Sales were $780,000 for the year, variable selling and administrative expenses were $88,400, and fixed
selling and administrative expenses were $170,000. There was no beginning inventory. Assume that direct
labor is a variable cost.
The contribution margin per unit was
Production Cost Data
Direct materials $153,000
Direct labor $110,500
Variable manufacturing overhead $204,000
Fixed manufacturing overhead $255,000
A. $27.30.
B. $32.50.
C. $17.50.
D. $25.70.

7. Last year, Gransky Corporation’s variable costing net operating income was $52,100, and its ending
inventory increased by 400 units. Fixed manufacturing overhead cost was $7 per unit. What was the
absorption costing net operating income last year?
A. $49,300
B. $52,100
C. $54,900
D. $2,800

8. Rank the following methods of assigning overhead costs from least accurate to most accurate.
A. Plantwide rate, departmental rates, activity-based costing
B. Plantwide rate, activity-based costing, departmental rates
C. Activity-based costing, departmental rates, plantwide rate
D. Departmental rates, plantwide rate, activity-based costing

9. Use the following information to answer this question.
Callaham Corporation is a wholesaler that sells a single product. Management has provided the following
cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit.The best estimate of the total contribution margin when 4,300 units are sold is
Sales volume (units)
4,000 5,000
Cost of sales $338,000 $422,500
Selling and administrative costs $89,600 $106,000
A. $64,070.
B. $38,270.
C. $134,590.
D. $43,430.

10. A company increased the selling price for its product from $5 to $6 per unit when total fixed expenses
increased from ,000 to $200,000 and variable expense per unit remained unchanged. How would
these changes affect the break-even point?
A. The break-even point in units would decrease.
B. The effect can’t be determined from the information given.
C. The break-even point in units would increase.
D. The break-even point in units would remain unchanged.

11. Use the following information to answer this question.
Harris Company produces a single product. Last year, Harris manufactured 17,000 units and sold 13,000
units. Production costs for the year were as follows:
Sales were $780,000 for the year, variable selling and administrative expenses were $88,400, and fixed
selling and administrative expenses were $170,000. There was no beginning inventory. Assume that direct
labor is a variable cost.
Under variable costing, the company’s net operating income for the year would be _______ than under
absorption costing.
Production Cost Data
Direct materials $153,000
Direct labor $110,500
Variable manufacturing overhead $204,000
Fixed manufacturing overhead $255,000
A. $108,000 higher
B. $60,000 higher
C. $60,000 lower
D. $108,000 lower

12. An increase in the activity level within the relevant range results in a/an
A. increase in fixed cost per unit.

B. unchanged fixed cost per unit.
C. proportionate increase in total fixed costs.
D. decrease in fixed cost per unit.

13. Use the following information to answer this question.
Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has
compiled the following data for the past five months of operations.
Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to which
of the following?
Machine
Hours
Electrical
Cost
August 1,000 $1,620
September 900 $1,510
October 1,500 $1,870
November 2,000 $1,950
December 1,300 $1,730
A. $870.00
B. $1,150.00
C. $1,306.50
D. $1,290.00

14. Use the following information to answer this question.
Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the
company has provided the following data concerning the activity rates in its activity-based costing system:
l The measure of activity for the size-related activity cost pool is the number of planned guests at the
wedding reception. The greater the number of guests, the larger the cake.
l The measure of complexity is the number of tiers in the cake.
l The activity measure for the order-related cost pool is the number of orders. (Each wedding involves
one order.)
l The activity rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. The
activity rates don’t include the costs of purchased decorations, such as miniature statues and wedding
bells, which are accounted for separately.
Data concerning two recent orders are listed here:
Activity Cost Pools Activity Rate
Size-related $0.94 per guest
Complexity-related $31.62 per tier
Order-related $55.79 per orderAssuming that the company charges $556.96 for the Smith wedding cake, what would be the overall
margin on the order?
Pyburn
Wedding
Smith
Wedding
Number of reception guests 72 189
Number of tiers on the cake 4 5
Cost of purchased decorations for cake $29.92 $68.75
A. $460.30
B. $165.41
C. $96.66
D. $152.45

15. Which statement is true for a company that uses variable costing?
A. The unit product cost changes because of changes in the number of units manufactured.
B. Profit fluctuates with sales.
C. Product costs include variable administration costs.
D. Any underapplied overhead is included in the product cost.

16. Use the following information to answer this question.
Callaham Corporation is a wholesaler that sells a single product. Management has provided the following
cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit.
The best estimate of the total monthly fixed cost is
Sales volume (units)
4,000 5,000
Cost of sales $338,000 $422,500
Selling and administrative costs $89,600 $106,000
A. $478,050.
B. $427,600.
C. $24,000.
D. $528,500.

17. Murdoch Corporation has provided the following data concerning its only product:
Murdoch Product Data
Selling price $230 per unit
Current sales 39,100 units
Break-even sales 29,716 unitsWhat is the margin of safety in dollars?
A. $8,993,000
B. $5,995,333
C. $2,158,320
D. $6,834,680

18. Use the following information to answer this question.
Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the
company has provided the following data concerning the activity rates in its activity-based costing system:
l The measure of activity for the size-related activity cost pool is the number of planned guests at the
wedding reception. The greater the number of guests, the larger the cake.
l The measure of complexity is the number of tiers in the cake.
l The activity measure for the order-related cost pool is the number of orders. (Each wedding involves
one order.)
l The activity rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. The
activity rates don’t include the costs of purchased decorations, such as miniature statues and wedding
bells, which are accounted for separately.
Data concerning two recent orders are listed here:
Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall
margin on the order?
Activity Cost Pools Activity Rate
Size-related $0.94 per guest
Complexity-related $31.62 per tier
Order-related $55.70 per order
Pyburn
Wedding
Smith
Wedding
Number of reception guests 72 189
Number of tiers on the cake 4 5
Cost of purchased decorations for cake $29.92 $68.75
A. $96.66
B. $152.45
C. $165.41
D. $460.30

19. Daniele Corporation uses an activity-based costing system with the following three activity cost pools:
Activity Cost Pool Total ActivityEnd of exam
The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.
The company has provided the following data concerning its costs:
The distribution of resource consumption across activity cost pools is given below:
The activity rate for the Fabrication activity cost pool is closest to _______ per machine hour.
Fabrication 50,000 machine-hours
Order processing 500 orders
Other not applicable
Cost Data
Wages and salaries $280,000
Depreciation $200,000
Occupancy $140,000
Total $620,000
Activity Cost Pools
Fabrication Order
Processing Other Total
Wages and
salaries 60% 30% 10% 100%
Depreciation 20% 35% 45% 100%
Occupancy 10% 50% 40% 100%
A. $7.44
B. $1.24
C. $3.72
D. $4.44

20. Green Company’s variable expenses are 75% of sales. At a sales level of $400,000, the company’s
degree of operating leverage is 8. At this sales level, fixed expenses are
A. $50,000.
B. $75,000.
C. $87,500.
D. ,000.

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