Chap006

Cost Management: Strategies for Business Decisions

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Chapter 06 - Managing Customer Profitability Chapter 06 Managing Customer Profitability True / False Questions 1. In most companies, all customers are equally profitable FALSE AICPA BB: Marketing Difficulty: Easy Learning Objective: 1 2. The concept of activity-based costing is used to determine how serving particular customers causes activities to be performed and costs to be incurred under customer profitability analysis. TRUE AACSB: Reflective Thinking AICPA BB: Marketing AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 3. Outsourcing is not useful in meeting customer needs because fixed costs remain constant. FALSE AACSB: Reflective Thinking AICPA BB: Marketing AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 6-1
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Chapter 06 - Managing Customer Profitability 4. Customer profitability analysis helps management see the overall financial picture for each customer and how management can use this information to help establish a strategic plan for the coming periods. TRUE AACSB: Reflective Thinking AICPA BB: Marketing AICPA FN: Measurement Difficulty: Medium Learning Objective: 1 5. Quantitative factors in customer profitability analysis include the status of being a supplier to a prestigious company and the potential to meet new contacts. FALSE AACSB: Reflective Thinking AICPA BB: Marketing AICPA FN: Measurement Difficulty: Easy Learning Objective: 1 6. When management is determining where to devote the company's resources in serving customers, it needs to remember that, typically, the lion's share of profits comes from the majority of their customers. FALSE AACSB: Reflective Thinking AICPA BB: Marketing AICPA FN: Measurement Difficulty: Medium Learning Objective: 1 7. The decision to keep certain customers holding on the phone may be the result of customer profitability analysis. TRUE AACSB: Reflective Thinking AICPA BB: Marketing AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 6-2
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8. It is generally best to tie employee incentives as closely as possible to organizational goals. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking Difficulty: Medium Learning Objective: 1 9. Typical measures of product delivery performance include the percentage of on-time deliveries, the percentage of orders filled and the delivery cycle time. TRUE AACSB: Reflective Thinking AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 10. Quality-related measures such as the number of customer complaints, the number of warranty claims, and the number of product units returned, are important in assessing the company's effectiveness in serving its customers. TRUE AACSB: Reflective Thinking AICPA BB: Marketing AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 11. Customer-related costs include selling costs, marketing costs, ordering costs and distribution costs. TRUE
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Chap006 - Chapter 06 - Managing Customer Profitability...

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