Exam 7: Fraud, Internal Control, and Cash

A company is considering eliminating a product line.The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance.If the product line is discontinued,

Opportunity cost must be considered in decisions involving

Argus Company anticipates that other sales will be affected by the acceptance of a special order.What should the company do?

The process of evaluating financial data that change under alternative courses of action is called

Which of the following steps in the management decision-making process does not generally involve the managerial accountant?

The process used to identify the financial data that change under alternative courses of action is called allocation of limited resources.

Fornelli, Inc.can produce 100 units of a component part with the following costs: Direct Materials \ 15,000 Direct Labor 6,500 Variable Overhead 16,000 Fixed Overhead 11,000 If Fornelli, Inc.can purchase the component part externally for $44,000 and only $4,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

Use the following information for questions Truckel, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor \ 11 Variable overhead 5 Fixed overhead \ 8 Total -Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18 each.If Truckel makes the wickets, variable costs are $16 per unit.Fixed costs are $8 per unit; however, $5 per unit is unavoidable.Should Truckel make or buy the wickets?

All of the following are relevant in deciding whether to eliminate an unprofitable segment except the segment's

A company is considering replacing old equipment with new equipment.Which of the following is a relevant cost for incremental analysis?

Use the following information for questions Hi-Tech Inc. has several outdated computers that cost a total of $17,800 and could be sold as scrap for $4,600. They could be updated for an additional $2,400 and sold. If Hi-Tech updates the computers and sells them, net income will increase by $9,000. -What amount would be considered sunk costs?

Use the following information for questions Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price \ 225,000 \ 375,000 Accumulated depreciation 90,000 -0- Annual operating costs 300,000 240,000 If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. -Which of the following amounts is irrelevant to the replacement decision?

Which of the following would generally not affect a make-or-buy decision?

New Age Makeup produces face cream.Each bottle of face cream costs $10 to produce and can be sold for $13.The bottles can be sold as is, or processed further into sunscreen at a cost of $14 each.New Age Makeup could sell the sunscreen bottles for $23 each.

All of the following are relevant to the sell or process further decision except

Incremental analysis is most useful

Opportunity cost is usually

Eddy Company is starting business and is unsure of whether to sell its product assembled or unassembled.The unit cost of the unassembled product is $60 and Eddy Company would sell it for $135.The cost to assemble the product is estimated at $27 per unit and Eddy Company believes the market would support a price of $174 on the assembled unit.What is the correct decision using the sell or process further decision rule?

In a decision to retain or replace old equipment, the salvage value of the old equipment is relevant in incremental analysis.

Nonfinancial information that management might evaluate in making a decision would not include