Chapter 3 Profit Enhancement Flashcards
How is target cost calculated ?
required selling price - Actual profit margin
Required selling price - Required profit margin
Market price - Actual profit margin
Market price - Required profit margin
Market price - required profit margin
True or false ?
Life cycle costing assesses cost on an accounting period basis
False
True or False ?
Life cycle costing clearly allocates development costs to individual products
True
In value analysis what element of value is the prestige ownership?
- cost value
- exchange value
- use value
- esteem value
Esteem value
Which of the following statement in relation to value analysis is true ? Select all that apply
- it assumes that the product design is ridged
- it takes into account a required standard of quality
- it seeks the lowest cost method of achieving desired end
- the market price that the business can charge is assumed to be fixed
- it takes into account a required standard of quality
- it seeks the lowest cost method of achieving desired end
Which of the following aspects of “value” should be considered in a value analysis exercise?
- Sales value
- Replacement value
- Exchange value
- Disposal value
Exchange value
When are the bulk of a products life cycle cost normally determined?
- at the design/ development stage
- when the product is introduced to the market
- when the product is in it’s growth stage
- on disposal
At design/ development stage
A learning curve would be expected to apply in the production of items which exhibit which of the following features (Select all that apply)
- simple to make
- mass produced
- new products
- continuous production
- make largely by labour
- new products
- continuous production
- make largely by labour
Classify the following activities under value chain analysis as primary activities or support activities ?
- Purchasing a raw materials
- equipment maintenance
- pricing of goods
- distribution of finished goods
- Purchasing a raw materials - Support
- equipment maintenance- primary
- pricing of goods- primary
- distribution of finished goods - primary
Classify the following activities under value chain analysis as primary activities or support activities ?
- repairing products
- quality management activities
- order processing
- capital expenditure
- repairing products - primary
- quality management activities - support
- order processing- primary
- capital expenditure - support
Which of the following methods van be used to decrease the difference between actual cost and target costs ?
- Using lower quality components
- simplifying design to use fewer components
- Using more advanced technology
- Reducing the amount of packaging
- Cutting product development times
- simplifying design to use fewer components
- Using more advanced technology
- Reducing the amount of packaging
Which following statements are true about the value chain?
- value activities are identical to business functions
- the focus of the value chain is external to the organisation
- Primary activities in the value chain include marketing, logistics, technology developments
- An organisation organisations value chain is one of a number value chains that make up value systems
- Activities in the value chain are interdependent
- the focus of the value chain is external to the organisation
- Activities in the value chain are interdependent
- An organisation organisations value chain is one of a number value chains that make up value systems
Which of stage of the product life cycle are product development cost generally recovered?
- introduction
- growth
- maturity
- decline
- Growth
Which of the following are possible features of value analysis? (Select all that apply)
- Cost reduction
- Improvement in quality
- Adding features to improve appeal to customers
- Focus on value to customer of each function
- Continual review of production method
Cost reduction
Improvements in quality
Continual review of production
At what stage of the profit cycle should sales revenues increase and the product start to make profit ?
- Introduction
- Growth
- Maturity
- Decline
Growth
