Question 1

Irrelevant costs generally include

Accepted Answer

A) yes yes no 
B) yes no no 
C) no no yes 
D) yes yes yes 
A) yes yes no 
B) yes no no 
C) no no yes 
D) yes yes yes

Question 2

Atlanta Motors Atlanta Motors is trying to decide whether it should keep its existing car washing machine or purchase a new one that has technological advantages (which translate into cost savings)over the existing machine.Information on each machine follows:
  Refer to Atlanta Motors.The incremental cost to purchase the new machine is

Accepted Answer

A) $11,000 
B) $13,000. 
C) $18,000. 
D) $20,000. 
A) $11,000 
B) $13,000. 
C) $18,000. 
D) $20,000.

Question 3

In a make or buy decision,the opportunity cost of capacity could

Accepted Answer

A) be considered to decrease the price of units purchased from suppliers. 
B) be considered to decrease the cost of units manufactured by the company. 
C) be considered to increase the price of units purchased from suppliers. 
D) not be considered since opportunity costs are not part of the accounting records. 
A) be considered to decrease the price of units purchased from suppliers. 
B) be considered to decrease the cost of units manufactured by the company. 
C) be considered to increase the price of units purchased from suppliers. 
D) not be considered since opportunity costs are not part of the accounting records.

Question 4

Relevant costs are

Accepted Answer

A) all fixed and variable costs. 
B) all costs that would be incurred within the relevant range of production. 
C) past costs that are expected to be different in the future. 
D) anticipated future costs that will differ among various alternatives. 
A) all fixed and variable costs. 
B) all costs that would be incurred within the relevant range of production. 
C) past costs that are expected to be different in the future. 
D) anticipated future costs that will differ among various alternatives.

Question 5

In an outsourcing decision,rent received from an outside party for facility use is a relevant cash inflow.

Accepted Answer

A) True 
 B)False

Question 6

Kellman Corporation Kellman Corporation sells a product for $18 per unit,and the standard cost card for the product shows the following costs:
  Refer to Kellman Corporation.Assume that Kellman has sufficient idle capacity to produce the 1,000 units.If Kellman wants to increase its operating profit by $5,600,what would it charge as a per-unit selling price?

Accepted Answer

A) $18.00 
B) $10.00 
C) $11.00 
D) $16.60 
A) $18.00 
B) $10.00 
C) $11.00 
D) $16.60

Question 7

Green Industries has two sales territories-North and South.Financial information for the two territories is presented below:   Because the company is in a start-up stage,corporate management feels that the North sales territory is creating too much of a cash drain on the company and it should be eliminated.If the North territory is discontinued,one sales manager (whose salary is $40,000 per year)will be relocated to the South territory.By how much would Green's income change if the North territory is eliminated?

Accepted Answer

A) increase by $88,000 
B) increase by $48,000 
C) decrease by $267,000 
D) decrease by $227,000 
A) increase by $88,000 
B) increase by $48,000 
C) decrease by $267,000 
D) decrease by $227,000

Question 8

Brooklyn Bakers Brooklyn Bakers is trying to decide whether it should keep its existing bread-making machine or purchase a new one that has technological advantages (which translate into cost savings)over the existing machine.Information on each machine follows:
  Refer to Brooklyn Bakers.The estimated $650 salvage value of the existing machine in 10 years represents a(n)

Accepted Answer

A) sunk cost. 
B) opportunity cost of selling the existing machine now. 
C) opportunity cost of keeping the existing machine for 10 years. 
D) opportunity cost of keeping the existing machine and buying the new machine. 
A) sunk cost. 
B) opportunity cost of selling the existing machine now. 
C) opportunity cost of keeping the existing machine for 10 years. 
D) opportunity cost of keeping the existing machine and buying the new machine.

Question 9

A fixed cost is relevant if it is

Accepted Answer

A) uncontrollable. 
B) avoidable. 
C) sunk. 
D) a product cost. 
A) uncontrollable. 
B) avoidable. 
C) sunk. 
D) a product cost.

Question 10

Segment margin measures a segment's contribution to the coverage of indirect expenses.

Accepted Answer

A) True 
 B)False

Question 11

Galveston Pipe Corporation The capital budgeting committee of the Galveston Pipe Corporation is evaluating the possibility of replacing its old pipe-bending machine with a more advanced model.Information on the existing machine and the new model follows:
  Refer to Galveston Pipe Corporation.The $80,000 market value of the existing machine is

Accepted Answer

A) a sunk cost. 
B) an opportunity cost of selling the old machine. 
C) irrelevant to the equipment replacement decision. 
D) a historical cost. 
A) a sunk cost. 
B) an opportunity cost of selling the old machine. 
C) irrelevant to the equipment replacement decision. 
D) a historical cost.

Question 12

Broncho Boot Corporation has been asked to submit a bid on supplying 1,000 pairs of military combat boots to the Armed Forces Training Center.The company's costs per pair of boots are as follows:   Assuming that there would be no commission on this potential sale,the lowest price the firm can bid is some price greater than

Accepted Answer

A) $23. 
B) $20. 
C) $17. 
D) $14. 
A) $23. 
B) $20. 
C) $17. 
D) $14.

Question 13

What is the relationship between scarce resources and an organization's production capacity?

Accepted Answer

In the long run,capacity is likely to be

Question 14

An ad hoc sales discount is

Accepted Answer

A) an allowance for an inferior quality of marketed goods. 
B) a discount that an ad hoc committee must decide on. 
C) brought about by competitive pressures. 
D) none of the above. 
A) an allowance for an inferior quality of marketed goods. 
B) a discount that an ad hoc committee must decide on. 
C) brought about by competitive pressures. 
D) none of the above.

Question 15

A linear programming problem can have

Accepted Answer

A) no more than three resource constraints. 
B) only one objective function. 
C) no more than two dependent variables for each constraint equation. 
D) no more than three independent variables. 
A) no more than three resource constraints. 
B) only one objective function. 
C) no more than two dependent variables for each constraint equation. 
D) no more than three independent variables.

Question 16

When a scarce resource,such as space,exists in an organization,the criterion that should be used to determine production is

Accepted Answer

A) contribution margin per unit. 
B) selling price per unit. 
C) contribution margin per unit of scarce resource. 
D) total variable costs of production. 
A) contribution margin per unit. 
B) selling price per unit. 
C) contribution margin per unit of scarce resource. 
D) total variable costs of production.

Question 17

In linear programming,a surplus variable represents the unused portion of a resource.

Accepted Answer

A) True 
 B)False

Question 18

Nature's Grain Corporation
Nature's Grain Corporation grows grain in rural areas of the South.The corporation's costs per bushel of grain (based on an average yield of 130 bushels per acre)follow:
   Nature's Grain Corporation defines direct material costs as seed,fertilizer,water,and other chemicals.The variable overhead costs represent maintenance and repair costs of machinery.The fixed overhead costs are completely comprised of depreciation expense on machinery and real estate taxes.
Refer to Nature's Grain Corporation.Assume that the current date is March 15.On this date,Nature's Grain Corporation must make a decision as to whether it is financially better off to plant a certain farm to grain,leave the land idle (no income is derived from idle land),or rent the land to another farmer for $50 per acre.Grain prices have been severely depressed in recent years and Nature's Grain Corporation's best guess is that grain prices will be around $2.00 per bushel at the time the crop is ready for harvest.What should the company do? Show calculations.

Accepted Answer

It has already been determined (answer t

Question 19

Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle?

Accepted Answer

A) direct labor 
B) equipment depreciation 
C) variable cost of utilities 
D) opportunity cost of production 
A) direct labor 
B) equipment depreciation 
C) variable cost of utilities 
D) opportunity cost of production

Question 20

If a cost is irrelevant to a decision,the cost could not be

Accepted Answer

A) a sunk cost. 
B) a future cost. 
C) a variable cost. 
D) an incremental cost. 
A) a sunk cost. 
B) a future cost. 
C) a variable cost. 
D) an incremental cost.

Irrelevant costs generally include

In a make or buy decision,the opportunity cost of capacity could

Relevant costs are

In an outsourcing decision,rent received from an outside party for facility use is a relevant cash inflow.

A fixed cost is relevant if it is

Segment margin measures a segment's contribution to the coverage of indirect expenses.

What is the relationship between scarce resources and an organization's production capacity?

An ad hoc sales discount is

A linear programming problem can have

When a scarce resource,such as space,exists in an organization,the criterion that should be used to determine production is

In linear programming,a surplus variable represents the unused portion of a resource.

Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle?

If a cost is irrelevant to a decision,the cost could not be

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, support Department Allocations, and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Exam 10: Relevant Information for Decision Making

Irrelevant costs generally include

In a make or buy decision,the opportunity cost of capacity could

Relevant costs are

In an outsourcing decision,rent received from an outside party for facility use is a relevant cash inflow.

A fixed cost is relevant if it is

Segment margin measures a segment's contribution to the coverage of indirect expenses.

What is the relationship between scarce resources and an organization's production capacity?

An ad hoc sales discount is

A linear programming problem can have

When a scarce resource,such as space,exists in an organization,the criterion that should be used to determine production is

In linear programming,a surplus variable represents the unused portion of a resource.

Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle?

If a cost is irrelevant to a decision,the cost could not be

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, support Department Allocations, and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters