Exam 10: Relevant Information for Decision Making

Swanson Company has 3 divisions: X, Y, and Z. Division X's income statement shows the following for the year ended December 31: Cost of goods sold is 75 percent variable and 25 percent fixed. Of the fixed costs, 60 percent are avoidable if the division is closed. All of the selling expenses relate to the division and would be eliminated if Division X were eliminated. Of the administrative expenses, 90 percent are applied from corporate costs. If Division X were eliminated, Swanson's income would

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

The objective in solving the linear programming problem is to determine the optimal levels of the

The amount of cost that differs across decision choices is referred to as _________________________.

One constraint in an LP problem is: 12X + 7Y > 4,000. If the optimal solution is X = 100 and Y = 500, this resource has

The excess of revenues over direct variable expenses and avoidable fixed expenses is referred to as ______________________________.

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?

What are three characteristics of relevant information?

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

Why is depreciation expense irrelevant to most managerial decisions, even when it is a future cost?

In an outsourcing decision, unavoidable fixed costs are irrelevant.

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

Under what circumstances is the sum of variable production and selling costs the appropriate minimum price for special orders?

In linear programming, a ______________________________ represents the overachievement of a minimum requirement.

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 $20,000 cost of the new machine represents a(n)

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

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?

Majestic Corporation In the two following constraint equations, X and Y represent two products (in units) produced by the Majestic Corporation. Constraint 1: 3X + 5Y < 4,200 Constraint 2: 5X + 2Y > 3,000 Refer to Majestic Corporation. What is the feasible range for the production of Y?

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 estimated $500 salvage value of the existing machine in 10 years represents a(n)

The relative product quantities composing a company's total sales is referred to as a company's _________________________.