Exam 8: Using Accounting Information to Make Managerial Decisions

Moving the delivery of services from within the organization to a provider outside the organization is referred to as

Because depreciation is a fixed cost that is not avoidable, it is irrelevant in making an outsourcing decision.

In determining whether or not to eliminate a segment, differential costs are relevant to the decision.

According to the theory of constraints, which of the following is not a step required to maximize and improve the performance of a value chain?

When a company outsources a product, it is easier to control product quality than if the product is produced internally.

Costs that has been incurred in the past is referred to as

A common mistake managers make in deciding to close a division is allowing

When a customer requests a special order and the supplier has capacity constraints, which of the following is most likely not an option for the customer?

If a company produces its products in a constrained resource environment, the company should

In making the decision about whether to accept a special order for pianos, which of the following costs should be considered?

A dance studio is considering a plan to add ballroom dance to its offerings.Which of the following is not a relevant consideration in this decision?

Which of the following costs is most likely relevant in deciding whether to accept a special order?

Which of the following should not influence a manager's decision in deciding whether or not to close a division?

Glade Industries manufactures and bottles energy drinks.Last year the company made and bottled 2,500,000 units.Glade has the capacity to manufacture and bottle 3,000,000 units per year.Glade has received a special offer from a grocery chain for 500,000 bottles with a special label to be sold as the house brand energy drink.Glade's normal selling price is $0.80 per bottle.The special offer is for $360,000 total ($0.72/bottle).Management estimates that the variable cost per bottle is $0.34; fixed manufacturing overhead is $0.22/bottle.Of the fixed costs assigned to this special order, $2,500 is for the special labels, the remainder is attributable to costs that will be incurred regardless of whether the special order is produced.What is the operating income generated by the special order?

Brown Manufacturing makes single kayaks, double kayaks, and lightweight competitive kayaks.The double kayak line has been showing losses for several years, and management is considering dropping the line.Recent income statements have been very similar to the following information which was prepared for the most recent year: Of the fixed costs, $393,750 is common costs that have been allocated equally to each product line.What will total operating income be if Brown drops the double kayak line?

Instead of maximizing income, as measured by traditional accounting methods, the theory of constraints seeks to maximize

Which of the following is not relevant to a decision involving the allocation of a single constrained resource among multiple products?

When a company continues to manufacture a product, but changes the geographical location of production, it is called

The theory of constraints seeks to maximize

Paper Moon, a manufacturer of outdoor lighting fixtures is operating at less than full capacity.The plant manager is considering making the mounting brackets now being purchased from a supplier at $8 each.Paper Moon already has the equipment to produce the brackets.The plant manager has analyzed the cost of producing the brackets and determined that each bracket will require $2 of direct material, $1 of direct labor, and $8 of manufacturing overhead.Seventy-five percent of the manufacturing overhead is a fixed cost that would not be affected by the decision to manufacture the brackets.Should Paper Moon continue to purchase the brackets or produce them internally?