Business and Personal Finance © 2007

Chapter 22: Pricing, Costing, and Growth

Practice Tests

1
_______ is the process of determining an item's selling price by adding the invoice cost of the item (how much the business paid for the item) to a certain percentage of that cost.
A)product cost-plus pricing
B)barter
C)product costing
D)variable costs
2
Analyzing all costs involved in creating a product is called _______.
A)cost behavior
B)product costing
C)product cost-plus pricing
D)the contribution margin
3
The _______ is the amount of money that the sale of a particular product contributes toward the payment of fixed costs and the profit of the business.
A)variable costs
B)cost behavior
C)contribution margin
D)product costing
4
The way a cost changes in relation to a change in business activity is called _______.
A)product costing
B)variable costs
C)the contribution margin
D)cost behavior
5
The point at which total sales equal total costs (variable and fixed costs) is called the _______.
A)contribution margin
B)break-even point
C)cost behavior
D)product costing
6
Adding new customers to a business usually results in _______.
A)decreased sales
B)increased sales
C)fewer customer referrals
D)increased costs
7
_______ is the amount of net income that a business sets as a goal.
A)break-even point
B)margin of safety
C)market share
D)target profit
8
The number of units a business needs to sell to reach a target profit is called _______.
A)margin of safety
B)target sales
C)market share
D)break-even point
9
The margin of safety equals the target sales minus the break-even sales, which indicates the amount of risk that sales will meet the _______.
A)break-even point
B)target profit
C)market share
D)contribution margin
10
The cost of _______ is determined by multiplying the amount of time spent to produce the product by the employee's hourly wage.
A)variable costs
B)fixed costs
C)direct materials
D)direct labor
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