Exam 4: Relevant Costs for Nonroutine Operating Decision

Which of the following is a relevant qualitative factor in a special order decision?

Use the following information for the next 3 questions. Loso Co. made and sold 100,000 of its only product in 2004 for $15 each. Loso's costs per unit for 2004 follow: In 2005, Loso expects to produce and sell 80,000 units. The selling price and variable costs per unit will remain unchanged, as will total fixed costs. Early in 2005, a new customer approaches Loso and requests a one-time special order for 30,000 units. -What are total budgeted fixed costs for 2005?

Moore Manufacturing has two major product lines, Gidgets and Gadgets. Income statements for the two product lines follow: If the Gidget product line were dropped, all of its product line fixed costs could be avoided. Should the Gidget product line be dropped, and why?

When an organization faces multiple constraints for multiple products, what kind of quantitative analysis needs to be performed?

How are constrained resources and relevant ranges related?

In making a special order decision, which of the following is a relevant fixed cost?

Factors that affect information quality in operating decisions include: I. Uncertainties II. Timeliness III. Analysis technique assumptions IV. Overall cost structure

Because many management decisions are unique, managers address them using a (an)

The general rule is to discontinue a segment of the business when its total contribution margin does not cover avoidable fixed costs.

(CMA) What is the opportunity cost of making a component part in a factory given no alternative use of the capacity?

Use the following information for the next 3 questions. Ricardo Company has three products, A, B, and C. The following information is available: -Which of the following is true?

A company will only incur an opportunity cost for a special order when

Effect on brand name recognition is a qualitative factor that managers should consider in

If a service organization is at capacity, it would only accept a special order for service if it was priced at or above the price that regular customers pay for the service.

When resources are constrained, managers should emphasize the product with the

One way to deal with constrained resources is to spend money to alleviate them.

Suppose a manager decides to sell a special order at the breakeven price. However, he is concerned that the organization could lose money if there are any errors in the analysis. About which factor should the manager be concerned?

Use the following data for the next 2 questions: Amsat Company has equipment that is in high demand, but has a limited amount of time available. The equipment can be used to produce a number of different products. The following data are available: -Which product should be emphasized last?

Use the following data for next 2 questions: Tieton Co. has two departments, Fabrication and Assembly. They produce 2 products. Product T needs 6 hours in fabrication and 6 hours in assembly. Product S needs 2 hours in fabrication and 4 hours in assembly. Fabrication has 24 hours available and Assembly 18. Total variable costs are $ 20 and $15 for T and S respectively. T sells for $22 and S for $16. -The constraints for Tieton's 2 departments are

Managers relax constraints by I. Using constrained resources more effectively II. Increasing available resources III. Emphasizing the product with the highest contribution margin per unit