Question 1

Miley, Inc.has excess capacity.Under what situations should the company accept a special order for less than the current selling price?

Accepted Answer

A) Never 
B) When additional fixed costs must be incurred to accommodate the order 
C) When the company thinks it can use the cheaper materials without the customer's knowledge 
D) When incremental revenues exceed incremental costs 
A) Never 
B) When additional fixed costs must be incurred to accommodate the order 
C) When the company thinks it can use the cheaper materials without the customer's knowledge 
D) When incremental revenues exceed incremental costs

Question 2

Max Company uses 20,000 units of Part A in producing its products.A supplier offers to make Part A for $7.Max Company has relevant costs of $8 a unit to manufacture Part A.If there is excess capacity, the opportunity cost of not buying Part A from the supplier is

Accepted Answer

A) $0. 
B) $20,000. 
C) $140,000. 
D) $160,000. 
A) $0. 
B) $20,000. 
C) $140,000. 
D) $160,000.

Question 3

In a retain or replace equipment decision, trade-in allowance available on old equipment

Accepted Answer

A) increases the cost of the new equipment. 
B) is relevant because it will not be realized if the old equipment is retained. 
C) is not relevant to the decision. 
D) reduces the cost of the old equipment. 
A) increases the cost of the new equipment. 
B) is relevant because it will not be realized if the old equipment is retained. 
C) is not relevant to the decision. 
D) reduces the cost of the old equipment.

Question 4

If a company has excess capacity and present markets will not be affected, it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.

Accepted Answer

A) True 
 B)False

Question 5

The basic decision rule in a sell or process further decision is: sell without further processing as long as the incremental revenue from processing exceeds the incremental processing costs.

Accepted Answer

A) True 
 B)False

Question 6

A company is deciding on whether to replace some old equipment with new equipment.Which of the following is not a relevant cost for incremental analysis?

Accepted Answer

A) Annual operating cost of the new equipment 
B) Annual operating cost of the old equipment 
C) Net cost of the new equipment 
D) Accumulated depreciation on the old equipment 
A) Annual operating cost of the new equipment 
B) Annual operating cost of the old equipment 
C) Net cost of the new equipment 
D) Accumulated depreciation on the old equipment

Miley, Inc.has excess capacity.Under what situations should the company accept a special order for less than the current selling price?

Max Company uses 20,000 units of Part A in producing its products.A supplier offers to make Part A for $7.Max Company has relevant costs of $8 a unit to manufacture Part A.If there is excess capacity, the opportunity cost of not buying Part A from the supplier is

In a retain or replace equipment decision, trade-in allowance available on old equipment

If a company has excess capacity and present markets will not be affected, it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.

The basic decision rule in a sell or process further decision is: sell without further processing as long as the incremental revenue from processing exceeds the incremental processing costs.

A company is deciding on whether to replace some old equipment with new equipment.Which of the following is not a relevant cost for incremental analysis?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters

Exam 7: Fraud, Internal Control, and Cash

Miley, Inc.has excess capacity.Under what situations should the company accept a special order for less than the current selling price?

Max Company uses 20,000 units of Part A in producing its products.A supplier offers to make Part A for $7.Max Company has relevant costs of $8 a unit to manufacture Part A.If there is excess capacity, the opportunity cost of not buying Part A from the supplier is

In a retain or replace equipment decision, trade-in allowance available on old equipment

If a company has excess capacity and present markets will not be affected, it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.

The basic decision rule in a sell or process further decision is: sell without further processing as long as the incremental revenue from processing exceeds the incremental processing costs.

A company is deciding on whether to replace some old equipment with new equipment.Which of the following is not a relevant cost for incremental analysis?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters