Exam 6: Relevant Information and Decision Making: Operational Decisions

The split-off point is the juncture in manufacturing where the joint products become individually identifiable.

Manufacturing costs incurred after the split?off are known as _____costs.

Operating at capacity indicates that the company does not want to produce more products.

In deciding whether to add or delete a product, service, or department, the depreciation associated with the custom-built equipment used to produce the product is an _____cost.

The difference in total cost revenue) between two alternatives

_____ is an example of a joint product.

Yellow Manufacturing Company produces three products using a joint process that accumulates $25,000 in joint costs.The products, A, B, and C, can be sold at split?off or processed further and then sold.The production level for each product is 10,000 units.The following unit information is also available: Separable Processing Sales Value Costs after Sales Value Product at Split-off Split-off at Completion A \ 12 \ 9 \ 21 B 10 4 17 C 15 6 19 Product B _____.

Only unit costs computed using the same denominator level of production should be compared.

If the limiting factor is demand i.e., unit of sales), the more profitable product is the one with the higher contribution per unit.

Alta Loma Industries has three product lines, A, B, and C.The following information is available: A B C Sales \ 100,000 \ 90,000 \ 36,000 Variable costs 48,000 Contribution margin \ 24,000 \ 42,000 \ 9,000 Fixed costs: Avoidable 9,000 18,000 3,000 Unavoidable Operating income \ 15,000 \ 2,400 Assume that product line C is discontinued and replaced with product line B.This will double the production and sales of product line B without increasing fixed costs.Operating income will increase _____.

The sum of all depreciation charged to past periods

Bradley's Department Store can sell either products A or B.The following information was gathered: A B Retal price per unit \ 54.00 \ 33.00 Cost of merchandise 43.00 27.00 If Bradley's Department Store can sell either 8,000 units of A or 18,000 units of B at full capacity, it should sell Product _____.

Leinart Company produces and sells a product that has variable costs of $9 per unit and fixed costs of $200,000 per year. If production decreases from 50,000 to 40,000 units, the cost per unit will _____.

Dumpster Company produces three products using a joint process that accumulates $25,000 in joint costs.The products, A, B, and C, can be sold at split?off or processed further and then sold.The production level for each product is 1,000 units.The following unit information is also available: Separable Processing Sales Value Costs after Sales Value Product at Split-off Split-off at Completion \ 12 \ 9 \ 21 10 4 17 15 6 19 If Dumpster Company makes the decisions that maximize profit, Dumpster Company's net income will be _____.

Jack Bowers has paid off the mortgage on his house and continues to live in the house.The interest income forgone by not selling the house and investing the proceeds is an example of an) _____.

Conflicts in the decision-making process can arise when superiors evaluate a manager's performance using a model consistent with the decision model.

Deadwood Company is considering replacing a machine that is presently used in the production of its product.The following data are available: Old Machine Replacement Machine Original cost \ 99,000 \ 88,000 Useful life in years 9 6 Current age in years 3 0 Book value \ 33,000 - Disposal value now \ 28,000 - Disposal value in 5 years \ 1,000 \ 6,000 Annual cash operating costs \ 17,000 \ 14,000 The _____ is a sunk cost.

Games Company manufactures two products, A and B.The following information was gathered: A B Selling price per unit \ 54.00 \ 66.00 Variable cost per unit 39.00 54.00 Total fixed costs \ 25,000 Games Company manufactures and sells three units of A for every two units of B.If the company sold 1,500 units of A, it would report operating income loss) of _____.

The salary forgone by a person who quits a job to start a business is an example of a n) _____.

Gain or loss on disposal of equipment is relevant in deciding whether to keep or replace equipment.