Question 1

A manager is attempting to determine whether a segment of the business should be eliminated. The focus of attention for this decision should be on

Accepted Answer

A)  the net income shown on the segment's income statement. 
B)  sales minus total expenses of the segment. 
C)  sales minus total direct expenses of the segment. 
D)  sales minus total variable expenses and avoidable fixed expenses of the segment. 
A)  the net income shown on the segment's income statement. 
B)  sales minus total expenses of the segment. 
C)  sales minus total direct expenses of the segment. 
D)  sales minus total variable expenses and avoidable fixed expenses of the segment.

Question 2

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, the corporation must make a decision as to whether it is financially better off to plant a certain farm with grain or leave the land idle (no income is derived from idle land). Grain prices have been severely depressed in recent years and Nature's Grain's best guess is that grain prices will be around $2.00 per bushel at the time the crop is ready for harvest. Should the company plant grain or leave the land idle? Explain.

Accepted Answer

The company should make their decision b

Question 3

Which of the following activities within an organization would be least likely to be outsourced?

Accepted Answer

A)  accounting 
B)  data processing 
C)  transportation 
D)  product design 
A)  accounting 
B)  data processing 
C)  transportation 
D)  product design

Question 4

In linear programming, a ______________________________ represents the unused amount of a resource at any level of operation.

Accepted Answer

The answer of In linear programming, a ______________________________ represents the...

Question 5

Credell Company uses 12,000 units of a part in its production process. The costs to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Anderson has received a quote of $60 from a potential supplier for this part. If Credell buys the part, 75 percent of the applied fixed overhead would continue. Credell Company would be better off by

Accepted Answer

A)  $30,000 to manufacture the part. 
B)  $348,000 to buy the part. 
C)  $60,000 to buy the part. 
D)  $216,000 to manufacture the part. 
A)  $30,000 to manufacture the part. 
B)  $348,000 to buy the part. 
C)  $60,000 to buy the part. 
D)  $216,000 to manufacture the part.

Question 6

In an outsourcing decision, variable costs of production are relevant.

Accepted Answer

A) True 
 B)False

Question 7

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. Waldrup received a special order for 1,200 units of the product. The only additional cost to Waldrup would be foreign import taxes of $2 per unit. If Waldrup is able to sell all of the current production domestically, what would be the minimum sales price that Waldrup would consider for this special order?

Accepted Answer

A)  $10.00 
B)  $15.00 
C)  $21.00 
D)  $23.00 
A)  $10.00 
B)  $15.00 
C)  $21.00 
D)  $23.00

Question 8

When making a decision to discontinue an operating segment, avoidable fixed costs are not considered.

Accepted Answer

A) True 
 B)False

Question 9

Define and discuss outsourcing.

Accepted Answer

Outsourcing occurs when an organization

Question 10

In a special order decision, the sales price should be sufficient to cover a job's variable costs, incremental fixed costs, and generate a profit.

Accepted Answer

A) True 
 B)False

Question 11

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is

Accepted Answer

A)  the total manufacturing cost of the component. 
B)  the total variable cost of the component. 
C)  the fixed manufacturing cost of the component. 
D)  zero. 
A)  the total manufacturing cost of the component. 
B)  the total variable cost of the component. 
C)  the fixed manufacturing cost of the component. 
D)  zero.

Question 12

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?

Accepted Answer

A)  X = 600, Y = 240 
B)  X = 800, Y = 640 
C)  X = 0, Y = 400 
D)  X = 1,200, Y = 0 
A)  X = 600, Y = 240 
B)  X = 800, Y = 640 
C)  X = 0, Y = 400 
D)  X = 1,200, Y = 0

Question 13

When multiple products are produced and sold, a change in the sales price of one product may cause a change in the sales mix of the firm.

Accepted Answer

A) True 
 B)False

Question 14

When a company has work performed by an external supplier, it is engaging in ____________________.

Accepted Answer

The answer of When a company has work performed by...

Question 15

A linear programming solution

Accepted Answer

A)  always involves more than one constraint. 
B)  always involves a corner point. 
C)  is the one with the highest vertex coordinates. 
D)  is provided by the input-output coefficients. 
A)  always involves more than one constraint. 
B)  always involves a corner point. 
C)  is the one with the highest vertex coordinates. 
D)  is provided by the input-output coefficients.

Question 16

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 17

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 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 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 19

Ralph Parrish operates a woodworking shop that makes tables and chairs. He has 25 employees working 40 hours per week, and he has 750 hours per week available in machine time. Parrish knows that he must make at least four chairs for every table. He has also determined the following additional requirements:
   Write the objective function and constraints for the above problem.

Accepted Answer

Objective

Question 20

Why are fixed costs generally more relevant in long-run decisions than short-run decisions?

Accepted Answer

In the long run, all costs are relevant.

A manager is attempting to determine whether a segment of the business should be eliminated. The focus of attention for this decision should be on

Which of the following activities within an organization would be least likely to be outsourced?

In linear programming, a ______________________________ represents the unused amount of a resource at any level of operation.

In an outsourcing decision, variable costs of production are relevant.

When making a decision to discontinue an operating segment, avoidable fixed costs are not considered.

Define and discuss outsourcing.

In a special order decision, the sales price should be sufficient to cover a job's variable costs, incremental fixed costs, and generate a profit.

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is

When multiple products are produced and sold, a change in the sales price of one product may cause a change in the sales mix of the firm.

When a company has work performed by an external supplier, it is engaging in ____________________.

A linear programming solution

Irrelevant costs generally include

An ad hoc sales discount is

Why are fixed costs generally more relevant in long-run decisions than short-run decisions?

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

A manager is attempting to determine whether a segment of the business should be eliminated. The focus of attention for this decision should be on

Which of the following activities within an organization would be least likely to be outsourced?

In linear programming, a ______________________________ represents the unused amount of a resource at any level of operation.

In an outsourcing decision, variable costs of production are relevant.

When making a decision to discontinue an operating segment, avoidable fixed costs are not considered.

Define and discuss outsourcing.

In a special order decision, the sales price should be sufficient to cover a job's variable costs, incremental fixed costs, and generate a profit.

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is

When multiple products are produced and sold, a change in the sales price of one product may cause a change in the sales mix of the firm.

When a company has work performed by an external supplier, it is engaging in ____________________.

A linear programming solution

Irrelevant costs generally include

An ad hoc sales discount is

Why are fixed costs generally more relevant in long-run decisions than short-run decisions?

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