Question 1

The minimum selling price that should be acceptable in a special order situation is equal to total

Accepted Answer

A)  production cost. 
B)  variable production cost. 
C)  variable costs. 
D)  production cost plus a normal profit margin. 
A)  production cost. 
B)  variable production cost. 
C)  variable costs. 
D)  production cost plus a normal profit margin.

Question 2

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

Accepted Answer

An opportunity cost is not a "cost" in t

Question 3

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  3,000
Refer to Majestic Corporation. What is the maximum number of units of Product X that can be produced?

Accepted Answer

A)  4,200 
B)  3,000 
C)  600 
D)  1,400 
A)  4,200 
B)  3,000 
C)  600 
D)  1,400

Question 4

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

Accepted Answer

A)  increase by $100,000. 
B)  decrease by $197,500. 
C)  decrease by $310,000. 
D)  decrease by $422,500. 
A)  increase by $100,000. 
B)  decrease by $197,500. 
C)  decrease by $310,000. 
D)  decrease by $422,500.

Question 5

In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignore the

Accepted Answer

A)  estimated disposal value of the old machine. 
B)  acquisition cost of the old machine. 
C)  operating costs of the new machine. 
D)  estimated disposal value of the new machine. 
A)  estimated disposal value of the old machine. 
B)  acquisition cost of the old machine. 
C)  operating costs of the new machine. 
D)  estimated disposal value of the new machine.

Question 6

Criswell Company has 15,000 units in inventory that had a production cost of $3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $23,000 and sold for $28,000. Another alternative is to sell the units to a junk dealer for $8,500. The relevant cost for Criswell to consider in making its decision is

Accepted Answer

A)  $45,000 of original product costs. 
B)  $23,000 for reworking the units. 
C)  $68,000 for reworking the units. 
D)  $28,000 for selling the units to the junk dealer. 
A)  $45,000 of original product costs. 
B)  $23,000 for reworking the units. 
C)  $68,000 for reworking the units. 
D)  $28,000 for selling the units to the junk dealer.

Question 7

The ____ prohibits companies from pricing products at different amounts unless these differences reflect differences in the cost to manufacture, sell, or distribute the products.

Accepted Answer

A)  Internal Revenue Service 
B)  Governmental Accounting Office 
C)  Sherman Antitrust Act 
D)  Robinson-Patman Act 
A)  Internal Revenue Service 
B)  Governmental Accounting Office 
C)  Sherman Antitrust Act 
D)  Robinson-Patman Act

Question 8

Ezell Company has 20,000 units in inventory that had a production cost of $4 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $30,000 and sold for $35,000. Another alternative is to sell the units to a junk dealer for $10,500. The relevant cost for Ezell to consider in making its decision is

Accepted Answer

A)  $80,000 of original product costs. 
B)  $30,000 for reworking the units. 
C)  $110,000 for reworking the units. 
D)  $35,000 for selling the units to the junk dealer. 
A)  $80,000 of original product costs. 
B)  $30,000 for reworking the units. 
C)  $110,000 for reworking the units. 
D)  $35,000 for selling the units to the junk dealer.

Question 9

Kenwood Electronics Corporation Kenwood Electronics Corporation manufactures and sells FM radios. Information on the prior year's operations (sales and production Model A1) is presented below:
  Refer to Kenwood Electronics Corporation. Assume that the remaining Model A1 radios can be sold through normal channels or to a foreign buyer for $6 per unit. If sold through regular channels, the minimum acceptable price will be

Accepted Answer

A)  $30. 
B)  $33. 
C)  $10. 
D)  $4. 
A)  $30. 
B)  $33. 
C)  $10. 
D)  $4.

Question 10

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 11

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

Accepted Answer

A)  $15,000. 
B)  $17,500. 
C)  $22,500. 
D)  $25,000. 
A)  $15,000. 
B)  $17,500. 
C)  $22,500. 
D)  $25,000.

Question 12

In evaluating the profitability of a specific organizational segment, all ____ would be ignored.

Accepted Answer

A)  segment variable costs 
B)  segment fixed costs 
C)  costs allocated to the segment 
D)  period costs 
A)  segment variable costs 
B)  segment fixed costs 
C)  costs allocated to the segment 
D)  period costs

Question 13

Lawson Company produces a part that has the following costs per unit:   Crest Corporation can provide the part to Lawson for $19 per unit. Lawson Company has determined that 60 percent of its fixed overhead would continue if it purchased the part. However, if Lawson no longer produces the part, it can rent that portion of the plant facilities for $60,000 per year. Lawson Company currently produces 10,000 parts per year. Which alternative is preferable and by what margin?

Accepted Answer

A)  Make-$20,000 
B)  Make-$50,000 
C)  Buy-$10,000 
D)  Buy-$40,000 
A)  Make-$20,000 
B)  Make-$50,000 
C)  Buy-$10,000 
D)  Buy-$40,000

Question 14

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 $5,000 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 15

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 $10,000 cost of the original machine represents a(n)

Accepted Answer

A)  sunk cost. 
B)  future relevant cost. 
C)  historical relevant cost. 
D)  opportunity cost. 
A)  sunk cost. 
B)  future relevant cost. 
C)  historical relevant cost. 
D)  opportunity cost.

Question 16

Waldrup Corporation Waldrup Corporation sells a product for $21 per unit, and the standard cost card for the product shows the following costs:
  Refer to Waldrup Corporation. Assume that Waldrup has sufficient idle capacity to produce the 1,200 units. If Waldrup wants to increase its operating profit by $6,000, what would it charge as a per-unit selling price?

Accepted Answer

A)  $15.00 
B)  $17.00 
C)  $21.00 
D)  $23.00 
A)  $15.00 
B)  $17.00 
C)  $21.00 
D)  $23.00

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 producing and selling at capacity. What is the minimum selling price that the division would consider on a "special order" of 1,000 chips on which no variable period costs would be incurred?

Accepted Answer

A)  $100 
B)  $72 
C)  $81 
D)  $94 
A)  $100 
B)  $72 
C)  $81 
D)  $94

Question 19

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

Accepted Answer

The answer of In linear programming, the equation that specifies...

Question 20

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

Accepted Answer

The answer of The amount of revenue that differs across...

The minimum selling price that should be acceptable in a special order situation is equal to total

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

In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignore the

The ____ prohibits companies from pricing products at different amounts unless these differences reflect differences in the cost to manufacture, sell, or distribute the products.

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

In evaluating the profitability of a specific organizational segment, all ____ would be ignored.

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

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

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

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

The minimum selling price that should be acceptable in a special order situation is equal to total

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

In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignore the

The ____ prohibits companies from pricing products at different amounts unless these differences reflect differences in the cost to manufacture, sell, or distribute the products.

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

In evaluating the profitability of a specific organizational segment, all ____ would be ignored.

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

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

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

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