50+ MCQ’s Emerging Concepts of Cost Accounting | (Free Resource)
MCQ’s Emerging Concepts of Cost Accounting
1. Place the following steps for the implementation of target costing in order :
A = Derive a target cost
B = Develop a target price
C = Perform value engineering
D = Determine target profit
(a) B, D, A, C
(b) B, A, D, C
(c) A, D, B, C
(d) A, B, C, D
2. In target costing
(a) the target cost is established first, then the target price.
(b) the target cost is the estimated long-run cost that enables a product or service to achieve a desired profit
(c) the focus of target costing is to undercut the competition
(d) target costs are generally higher than current costs
3. The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide adequate operating income is referred to as
(a) Cost-plus pricing
(b) Target costing
(c) Benchmark costing
(d) Full costing
4. The costing technique that produces a stipulated profit when a product is sold at its estimated market-driven price is termed:
(a) Life cycle costing
(b) Product costing
(c) Target costing
(d) Standard costing
5. The four tasks that follow take place in the concept known as target costing:
(1) Value engineering
(2) Establish a target selling price
(3) Establish a target cost
(4) Establish a target profit
Which is the correct sequence of these tasks?
(a) 1, 3, 4, 2
(b) 3, 1, 4, 2
(c) 2, 4, 3, 1
(d) 2, 3, 1, 4
6. Ramesh uses target costing and sells a product for Rs 36 per unit. The company seeks a profit margin equal to 25% of sales. If the current manufacturing cost is Rs 29 per unit, the firm will need to implement a cost reduction of
(a) Rs 0
(b) Rs 2
(c) Rs 9
(d) Rs 20
7. Sun Corporation uses target costing and sells a product for Rs 40 per unit. The company seeks a profit margin equal to 30% of sales. If target-costing calculations revealed a need for a Rs 4 cost reduction, the firm’s current manufacturing cost must be:
(a) Rs 12
(b) Rs 24
(c) Rs 28
(d) Rs 32
8. Which of the following denotes a target cost?
(a) Market price – Desired profit margin
(b) Standard selling price – Standard profit margin
(c) Standard selling price – Target profit margin
(d) Desired selling price – Desired profit margin
(e) Market price – Return on Investment (ROI)
9. Which of the following is true with respect to target costing?
(a) It is a method of price determination
(b) It is used to develop a short run price
(c) It is a process where the cost of the product is determined and then an appropriate price is chosen
(d) It is the maximum manufacturing cost for a product which is arrived at by subtracting the acceptable profit margin from the expected market price
10. Which of the following is usually the longest stage in the product life cycle?
(a) Introduction phase
(b) Growth phase
(c) Maturity phase
(d) Saturation phase
(e) Decline Phase
| Answers: 1)B, D, A, C 2)the target cost is the estimated long-run cost that enables a product or service to achieve a desired profit 3)Target costing 4)Target costing 5)2, 4, 3, 1 6)Rs 2 7)Rs 32 8)Market price – Desired profit margin 9)It is the maximum manufacturing cost for a product which is arrived at by subtracting the acceptable profit margin from the expected market price 10)Maturity phase |
