Question 1

In setting compensation structures,fixed salary expense is normally not considered.

Accepted Answer

A) True 
 B)False

Question 2

In linear programming,a surplus variable is associated with   constraints.

Accepted Answer

A) True 
 B)False

Question 3

An outside firm selected to provide services to an organization is called a

Accepted Answer

A) contract vendor. 
B) lessee. 
C) network organization. 
D) centralized insourcer. 
A) contract vendor. 
B) lessee. 
C) network organization. 
D) centralized insourcer.

Question 4

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 $4,000 of annual operating costs that are common to both the old and the new machine are an example of a(n)

Accepted Answer

A) sunk cost. 
B) irrelevant cost. 
C) future avoidable cost. 
D) opportunity cost. 
A) sunk cost. 
B) irrelevant cost. 
C) future avoidable cost. 
D) opportunity cost.

Question 5

The potential rental value of space used for production activities

Accepted Answer

A) is a variable cost of production. 
B) represents an opportunity cost of production. 
C) is an unavoidable cost. 
D) is a sunk cost of production. 
A) is a variable cost of production. 
B) represents an opportunity cost of production. 
C) is an unavoidable cost. 
D) is a sunk cost of production.

Question 6

Memory Division of Missing Byte,Inc. The Memory Division of Missing Byte,Inc.produces a high-quality computer chip.Unit production costs (based on capacity production of 100,000 units per year)follow:
  Refer to Memory Division of Missing Byte,Inc.Assume,for this question only,that the Memory Division is operating at a level of 70,000 chips per year.What is the minimum price that the division would consider on a "special order" of 1,000 chips to be distributed through normal channels?

Accepted Answer

A) $78 
B) $95 
C) $100 
D) $81 
A) $78 
B) $95 
C) $100 
D) $81

Question 7

In an outsourcing decision,avoidable fixed costs are irrelevant.

Accepted Answer

A) True 
 B)False

Question 8

Assume a company produces three products: A,B,and C It can only sell up to 3,000 units of each product.Production capacity is unlimited.The company should produce the product (or products)that has (have)the highest

Accepted Answer

A) contribution margin per hour of machine time. 
B) gross margin per unit. 
C) contribution margin per unit. 
D) sales price per unit. 
A) contribution margin per hour of machine time. 
B) gross margin per unit. 
C) contribution margin per unit. 
D) sales price per unit.

Question 9

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 for this question only that the company decided to plant the grain.A local oil refiner has approached the company about converting the crop to grain alcohol (used to make gasohol)rather than selling the grain to the local grain elevator.If Nature's Grain converts the grain to alcohol,it will incur additional costs of $0.60 per bushel,and the company will be able to sell the crop to the oil refiner for the equivalent of $2.60 per bushel.Otherwise,the company can sell the grain crop to the local grain elevator for $1.85 per bushel.If Nature's Grain elects to sell the grain to the refinery,the company will not incur the variable selling costs.What should the company do? Support your answer with calculations.

Accepted Answer

The company's alternatives are to sell t

Question 10

Depreciation on factory equipment is normally a relevant cost in product line decisions.

Accepted Answer

A) True 
 B)False

Question 11

Information that has a bearing on future events is relevant in the decision-making process.

Accepted Answer

A) True 
 B)False

Question 12

The benefits foregone when one course of action is chosen over another are referred to as ______________________________.

Accepted Answer

The answer of The benefits foregone when one course of...

Question 13

In a special order decision,unavoidable current fixed costs are taken into consideration in setting a sales price.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following are relevant in a make or buy decision?

Accepted Answer

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

Question 15

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.Kellman received a special order for 1,000 units of the product.The only additional cost to Kellman would be foreign import taxes of $1 per unit.If Kellman is able to sell all of the current production domestically,what would be the minimum sales price that Kellman would consider for this special order?

Accepted Answer

A) $18.00 
B) $11.00 
C) $5.40 
D) $19.00 
A) $18.00 
B) $11.00 
C) $5.40 
D) $19.00

Question 16

Most ____ are relevant to decisions to acquire capacity,but not to short-run decisions involving the use of that capacity.

Accepted Answer

A) sunk costs 
B) incremental costs 
C) fixed costs 
D) prime costs 
A) sunk costs 
B) incremental costs 
C) fixed costs 
D) prime costs

Question 17

Haskins Company is currently operating at a loss of $15,000.The sales manager has received a special order for 5,000 units of product,which normally sells for $35 per unit.Costs associated with the product are: direct material,$6; direct labor,$10; variable overhead,$3; applied fixed overhead,$4; and variable selling expenses,$2.The special order would allow the use of a slightly lower grade of direct material,thereby lowering the price per unit by $1.50 and selling expenses would be decreased by $1.If Haskins wants this special order to increase the total net income for the firm to $10,000,what sales price must be quoted for each of the 5,000 units?

Accepted Answer

A) $23.50 
B) $24.50 
C) $27.50 
D) $34.00 
A) $23.50 
B) $24.50 
C) $27.50 
D) $34.00

Question 18

____ programming relates to a variety of techniques that are used to allocate limited resources among activities to achieve a specific objective.

Accepted Answer

A) Integer 
B) Input-output 
C) Mathematical 
D) Regression 
A) Integer 
B) Input-output 
C) Mathematical 
D) Regression

Question 19

Which of the following qualitative factors favors the buy choice in a make or buy decision for a part?

Accepted Answer

A) maintaining a long-term relationship with suppliers 
B) quality control is critical 
C) utilization of idle capacity 
D) part is critical to product 
A) maintaining a long-term relationship with suppliers 
B) quality control is critical 
C) utilization of idle capacity 
D) part is critical to product

Question 20

What are three characteristics of relevant information?

Accepted Answer

Relevant information must be:

In setting compensation structures,fixed salary expense is normally not considered.

In linear programming,a surplus variable is associated with constraints.

An outside firm selected to provide services to an organization is called a

The potential rental value of space used for production activities

In an outsourcing decision,avoidable fixed costs are irrelevant.

Assume a company produces three products: A,B,and C It can only sell up to 3,000 units of each product.Production capacity is unlimited.The company should produce the product (or products)that has (have)the highest

Depreciation on factory equipment is normally a relevant cost in product line decisions.

Information that has a bearing on future events is relevant in the decision-making process.

The benefits foregone when one course of action is chosen over another are referred to as ______________________________.

In a special order decision,unavoidable current fixed costs are taken into consideration in setting a sales price.

Which of the following are relevant in a make or buy decision?

Most ____ are relevant to decisions to acquire capacity,but not to short-run decisions involving the use of that capacity.

____ programming relates to a variety of techniques that are used to allocate limited resources among activities to achieve a specific objective.

Which of the following qualitative factors favors the buy choice in a make or buy decision for a part?

What are three characteristics of relevant information?

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

In setting compensation structures,fixed salary expense is normally not considered.

In linear programming,a surplus variable is associated with constraints.

An outside firm selected to provide services to an organization is called a

The potential rental value of space used for production activities

In an outsourcing decision,avoidable fixed costs are irrelevant.

Assume a company produces three products: A,B,and C It can only sell up to 3,000 units of each product.Production capacity is unlimited.The company should produce the product (or products)that has (have)the highest

Depreciation on factory equipment is normally a relevant cost in product line decisions.

Information that has a bearing on future events is relevant in the decision-making process.

The benefits foregone when one course of action is chosen over another are referred to as ______________________________.

In a special order decision,unavoidable current fixed costs are taken into consideration in setting a sales price.

Which of the following are relevant in a make or buy decision?

Most ____ are relevant to decisions to acquire capacity,but not to short-run decisions involving the use of that capacity.

____ programming relates to a variety of techniques that are used to allocate limited resources among activities to achieve a specific objective.

Which of the following qualitative factors favors the buy choice in a make or buy decision for a part?

What are three characteristics of relevant information?

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