Exam 10: Relevant Information for Decision Making

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.If the company buys the new machine and disposes of the existing machine,corporate profit over the five-year life of the new machine will be ____ than the profit that would have been generated had the existing machine been retained for five years.

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 incremental cost to purchase the new machine is

Which of the following costs would not be accounted for in a company's recordkeeping system?

A linear programming model must

In linear programming,the equation that specifies management's objective is referred to as a(n)___________________________________.

Which of the following is not a characteristic of relevant costing information? It is

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

Costs forgone when an individual or organization chooses one option over another are

In a linear programming problem,constraints are indicated by

What is an opportunity cost and why is it a relevant cost?

Consider the following linear programming problem and assume that non-negativity constraints apply to the independent variables: Max CM = $14X + $23Y Subject to Constraint 1: 4X + 5Y < 3,200 Constraint 2: 2X + 6Y < 2,400 Which of the following are feasible solutions to the linear programming problem?

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

Anderson Company uses 10,000 units of a part in its production process.The costs to make a part are: direct material,$12; direct labor,$25; variable overhead,$13; and applied fixed overhead,$30.Anderson has received a quote of $55 from a potential supplier for this part.If Anderson buys the part,70 percent of the applied fixed overhead would continue.Anderson Company would be better off by

Calvert Company has 3 divisions: A,B,and C Division A's income statement shows the following for the year ended December 31: Cost of goods sold is 80 percent variable and 20 percent fixed.Of the fixed costs,50 percent are avoidable if the division is closed.All of the selling expenses relate to the division and would be eliminated if Division A were eliminated.Of the administrative expenses,85 percent are applied from corporate costs.If Division A were eliminated,Calvert's income would

The feasible region for a graphical solution to a profit maximization problem includes

Maximization of contribution margin is a common objective function in linear programming.

The amount of revenue that differs across decision choices is referred to as ______________________________.

In evaluating alternative courses of action,a manager should select the alternative that provides the highest incremental benefit to the company.

Minimization of variable costs is a common objective function in linear programming.

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