Provided by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
PLC Main Page | PLC Discussion Questions
| Graduate Management Accounting Course
1. In the literature of product life cycle management, the term technological risk refers to
a. lost sales related to deferring investments.
b. lost sales related to making unprofitable investments.
c. losses related to declining market share for companies that
are not technological leaders.
d. losses related to research and development costs.
e. none of these.
2. In the literature of product life cycle management, the term market risk refers to
a. lost sales related to deferring investments.
b. lost sales related to making unprofitable investments.
c. losses related to declining market share for companies
that are not technological leaders.
d. losses related to research and development costs.
e. none of these.
3. Forward pricing refers to pricing products based on the expected product costs during the which stage of the product life cycle?
a. startup.
b. growth.
c. maturity.
d. decline.
e. abandon.
4. Which of the following is more closely related to the learning curve?
a. economies of scope.
b. dynamic economies of scale.
c. static economies of scale.
d. diminishing returns to scale.
e. none of these.
5. Approximately what percentage of a product’s life cycle costs are established in the conception, design and development stages?
a. 50 to 60.
b. 60 to 70.
c. 70 to 80.
d. over 80.
e. none of these.
6. The portfolio concept related to investment management and product life cycle management
a. considers a company’s investments projects as a whole
rather than as separate and unrelated.
b. recognizes that synergistic benefits are obtained from many
interrelated projects.
c. considers that mature investment projects tend to support
projects at other life cycle stages.
d. a. and b.
e. a., b. and c.
7. Forward pricing refers to
a. Establishing prices on new products that are high, relative to the initial unit cost, to
allow for large discounts after sales begin to lag.
b. Establishing
prices on new products just above the initial unit cost to discourage
competitors from entering the market.
c. Establishing prices on new products below the initial unit
cost to discourage competitors from entering the market.
d. Establishing
prices on new products prior to production.
e. Establishing
prices on new products by working forward from the target cost.
8. Which of the product life cycle production stages are typically evaluated in traditional cost accounting control systems?
a. conception.
b. design.
c. development.
d. production.
e. c and d.
9. From the marketing life cycle perspective, a company’s profits usually peak during the
a. startup
stage.
b. growth stage.
c. maturity stage.
d. harvest stage.
e. none of these.
10. Which of the following is (are) compatible with the life cycle concept?
a. A vertical
organizational structure.
b. Employee empowerment.
c. Responsibility accounting.
d. Standard
costing.
e. b and c.
11. Conceptually, whole life product costs end when
a. the producer
stops producing the product.
b. the producer stops providing service & parts for the
product.
c. the consumer
disposes of the product.
d. the externality costs to society & the environment end.
12. The greatest opportunity for product life cycle cost reductions are in the
a. conception
stage.
b. design stage.
c. development stage.
d. production stage.
e. logistical support stage.
13. Which of the following costs are not considered in product life cycle management?
a. design costs.
b. development costs.
c. production costs.
d. logistical support costs.
e. none of the above.
14. What is the main objective of product life cycle analysis from the producer's perspective?
a. minimize life cycle externalities.
b. maximize life cycle profit.
c. minimize life cycle costs.
d. cost vs. benefit.
e. none of the above.
15. What is the main objective of product life cycle analysis from the customer's perspective?
a. minimize life cycle externalities.
b. maximize life cycle profit.
c. minimize life cycle costs.
d. cost vs. benefit.
e. none of the above.
16. What is the main objective of product life cycle analysis from society's perspective?
a. minimize life cycle externalities.
b. maximize life cycle profit.
c. minimize life cycle costs.
d. cost vs. benefit.
e. none of the above.
17. What is the producer's strategic objective at the startup and production stage of the product life cycle?
a. cash flow and profit.
b. profit.
c. sales growth.
d. all of the above.
e. none of the above.
18. Target costing is most applicable to which stages in the product life cycle?
a. design and
development.
b. development and production.
c. production and logistical support.
d. logistical support and abandonment.
e. none of the above.
19. In product life cycle management, which costs are emphasized in design and development?
a. product costs related to characteristics such as the
number of product parts.
b. logistical support costs.
c. customer consumption costs.
d. a. and b.
e. a., b. and c.
20. Companies have been reluctant to use product life cycle management concepts for which of the following reasons?
a. the emphasis in PLC management is on the long run rather
than the short run payback.
b. the benefits of PLC management are not equally distributed
across the organization's functional groups.
c. the data needed to support the PLC is difficult to obtain.
d. a. and b.
e. a., b. and c.
Product Life Cycle MC Solution