COST ACCOUNTING EXPERIENTIAL LEARNING

ASSIGNMENT

TOPIC: TARGET COSTING MCQ QUESTIONS

MBA- International Business

DIV-A
Batch: 2021-2023
Semester- 2

SUBMITTED TO

MADHURA RANADE

Date of Submission-26/01/2022

Submitted by- GROUP-8

Name PRN
Anisheel Kashyap 21020241008
Chirag Garg 21020241016
Nandni Lakra 21020241031
Pranav Raja 21020241036
Shubham Narula 21020241045
Sourashis Biswas 21020241049
Aastha Mishra 21020241058
1. Which of the following are true?
a. Target costing = Selling Price - Profit Margin
b. Target costing = Selling Price + Profit Margin
c. Target costing = Selling Price - Cost Price
d. Target costing = Selling Price + Cost Price

Ans: a

2. Choose the correct option which has the correct combination of Strategic Implications of
Target Costing:
a. Cost, Savings,Time
B. Quality, Savings, Time
C. Quality, Cost, Time
D. Cost, Savings, Quality

Ans: c

3. Choose from the following which is NOT a key idea of Target Costing:
a. Price-led Costing
B. Design
C. Customer Driven
D. None of the above

Ans: d

4. Which of the following is not involved in establishing Target Costs:

a. Profit Target
B. Market Research
C. competitor Analysis
D. Feedback

Ans: D

5. The department in the firm that is most likely positioned to identify the customers' needs and
their perceived value for a product is the:

a. purchasing department.
B. accounting department.
C. production department.
D. marketing department.
Ans: d

6. When the firm uses the target-costing approach to pricing, the target cost per unit is the
difference between the per unit target price and the per unit target
a. contribution margin.
B. production costs.
C. gross margin.
D. operating income.
Ans: d

7. Which of the following is NOT a benefit of Target Costing?

a. Reduces costs, through more effective and efficient design

B. Increase communication & cooperation among departments
C. Helps firm to achieve desired profitability on new or redesigned products
D. Optimizes number of direct labour needed in producing a good/service

Ans: d

8. What is formula for Profit Margin?

a. Sales Revenue / Profit

B. Profit / COGS
C. Profit / Sales Revenue
D. COGS / Profit

Ans: c

9. Which of the following is NOT a phase in the Sales Life Cycle?

answer choices
a. Decline
B. Growth
C. Pivoting
D. Maturity
Ans: c

10. Which one of the following types of businesses would be most likely to use the cost-plus
pricing approach?
a. Management consultant
B. Toilet paper manufacturer
C. Fruit grower
D. Cement manufacturer
Ans: c

11. Which one of the following factors would make entry into the market attractive to potential
new businesses?
a. Current market has close customer relations
B. Limited profit margins
C. .Current advanced product development
D. Small capital needs
Ans: d

12. The target price is subtracted from per unit target operating income to calculate:
a. Total Current full cost
b. Total cost per unit
c. Total operating income per unit
d. Target unit per cost

Ans: d

13. The time between a customer’s order placement till the customer receives its delivery is
known as:
a. Manufacturing lead time
b. Manufacturing cycle time
c. Customer response time
d. System process time
Ans: C

14. The description in mathematical form to represent changes in cost, with level of activity
related to that cost is classified as:
a. Cost function
b. Revenue function
c. Unit function
d. Relative function

Ans: a

15. An example of a firm that focuses on using the product differentiation strategy would be
a. Big Bazaar.
B. Wal-Mart.
C. More supermarket
D. Pepsico, Inc.
Ans: d

16. XYZ is a company which sells pickles to customers. XYZ can only charge Rs. 20 per unit. If
the company’s intended margin is 10%, calculate the target cost per unit.
a. Rs 18
B. Rs 20
C. Rs 22
D. Rs 16

Ans: a

17. Which of the following is NOT a benefit of Target Costing?

a. Reduces costs, through more effective and efficient design

B. Increase communication & cooperation among departments
C. Helps firm to achieve desired profitability on new or redesigned products
D. Optimises number of direct labour needed in producing a good/service

Ans: d

18. Why would full life cycle costing be chosen over full manufacturing costing?
a. To allow easy markup using industry price, judgment or a desired level of profit.
B. Advantageous as all costs are included, so that markup is directly tied to desired level of profit
C. Simpler method for firms with high R&D and distribution costs
D. A more transparent method of calculating COGS

Ans: b

19. The following are all steps in target costing

1. Calculate target cost
2. Calculate estimated current cost of production
3. Determine the required profit
4. Decide on a selling price
5. Calculate the target cost gap

Which is the right order?

a. 1 2 3 4 5
b. 2 3 5 1 4
c. 4 3 1 2 5
d. 4 2 3 1 5

Ans: c

20. Which of the following best describes the concept of prime costs?

A Indirect fixed costs.

B Direct labour hours cost.
C Combination of direct materials and direct labour costs.
D Combination of direct materials, direct labour and indirect overhead costs.

Ans: c