Management Accounting - Study Mode
[#146] If total production is 25000 units and target annual operating income is $300000 then target operating income per unit would be
Correct Answer
(B) $12
Explanation
Solution: Target operating income = Target annual operating income ÷ Total production = $300000 ÷ 25000 = $12.
[#147] Costs that are planned in future and has not been incurred are known as
Correct Answer
(A) designed-in costs
Explanation
Solution: Costs that are planned in future and has not been incurred are known as designed-in costs. Design to cost is the process of reducing cost in the requirements and design phase of a project.
[#148] Target annual operating income is divided with invested capital to calculate
Correct Answer
(A) target rate of return on investment
Explanation
Solution: Target annual operating income is divided with invested capital to calculate target rate of return on investment. A rate of return (RoR) is the net gain or loss on an investment over a specified time period, expressed as a percentage of the investment's initial cost.
[#149] A technique, which accumulates and tracks costs of business function in value chain attributed to each market offering from R&D to final customer support, is called
Correct Answer
(C) life cycle costing
Explanation
Solution: A technique, which accumulates and tracks costs of business function in value chain attributed to each market offering from R&D to final customer support, is called life cycle costing. Life cycle costing is the process of compiling all costs that the owner or producer of an asset will incur over its lifespan.
[#150] If cost base is $350 and markup component is 11% then prospective selling price will be
Correct Answer
(A) 388.5
Explanation
Solution: Prospective selling price = $350 × 111% = 388.5.