Module 3 Flashcards
True or False?
Product lifecycle analysis emphasizes the importance of strategic planning late in the cycle of producing products and services
False
True or False?
Target costing is a process that can involve trial and error learning before achieving the target profit
True
True or False?
Net-present value calculates the expected monetary gain or loss from a potential capital investment by discounting all expected future cash flows to the present point in time using the hurdle or discount rate
True
True or False?
In comparison to straight-line depreciation, accelerated depreciation for tax purpose normally increases the present value of the investment
True
True or False?
Economies of scope are present if producing two products in the market is more expensive than producing the same two products within a firm
False
In a competitive market, key factor(s) affecting pricing decisions is/are the:
A. customer’s willingness to pay
B. prices charged for alternative products
C. cost of producing and delivering the product
D. All of the above
D
To understand how competitors might price competing products, a company:
A. needs to understand the competitor’s technologies and financial conditions
B. may get information from suppliers that service the competitor
C. may use reverse engineering
D. All of these answers are correct
D
Which of the following is the most important limitation of the economic model for setting product prices?
A. Accounting systems do not measure marginal costs and revenues
B. The economic model does not produce a clear strategy for pricing
C. The economic model is very complex and difficult to understand
D. There is no agreement on which economic model to use for pricing
A
Which of the following is/are a non-discounted method for evaluating a capital investment?
A. Internal rate of return
B. Net-present value
C. Payback
D. Accounting rate of return
E. C and D
E
Which of the following is not true about the half-year convention for calculating after-tax cash flows from capital investment:
A. The half-year convention normally applies in the first year the asset is used.
B. When a capital asset is disposed of before the completion of its taxable life, a full year of depreciation applies
C. The half-year convention means an asset with a five-year life can have depreciation expense in year six
D. The MACRS table does not need to be adjusted for the half-life convention in the first year of the life of a capital asset.
E. All of the above are true
E
Which of the following is a characteristic of short-run economies of scale?
A. The average fixed cost declines as output increases
B. The average fixed cost increases as output increases
C. The average fixed cost remains constant as output increases
D. The average fixed costs decline when a firm produces a wider variety of goods
A
Which of the following is an example of a change in horizontal firm boundaries?
A. Adding a new product line
B. Changing from make to buy (outsourcing) for a major part of the company’s product (that was previously made in house)
C. Changing from buy to make (in-sourcing) for a major part of the company’s product (that was previously purchased)
D. Acquiring a company that grows trees by a company that produces paper boxes
E. Only B, C, and D
A
Which of the following is an example of a change in vertical firm boundaries?
A. Adding a new product line
B. Outsourcing a major part of the company’s product (that was previously made in house)
C. In-sourcing a major part of the company’s product (that was previously purchased)
D. Acquiring a company that supplies wood by a company that produces boxes
E. Only B, C, and D
E
When using activity-based costing (ABC) for strategic analysis (module 3) as opposed to ABC for cost accounting (module 1):
A. Fewer activities are typically modeled
B. Cross-functional teams are less likely to use the accounting information
C. Attention is more likely to be focused on managing processes, systems, or large portions of the value chain
D. The information is used to evaluate fewer alternatives
E. There is less uncertainty about future performance
C
Companies often use big data to:
A. To explore new strategic opportunities that are not well understood
B. To investigate the value chain that is broader in scope than any one organization
C. To study different sets of data that had previously been studied only independently
D. All of the above
D
