Exam 8: Using Accounting Information to Make Managerial Decisions

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?

Which of the following laws prohibits companies from offering the same item to different customers at different prices?

Brandy Company is deciding whether or not to discontinue one of its divisions.The division's contribution margin is $27,000 per year.The fixed costs charged to the division total $32,000, but $15,000 would be eliminated if the division is discontinued.If the division is eliminated, the overall operating income will

Given the following data, what is the total relevant cost of internal production of 50 units?

The costs that should be included in an outsourcing decision are

Because of rising salaries and cost of healthcare and other employee benefits, TJ Manufacturing has decided to outsource one of its non-value-added processes.As leader of the team responsible for determining the best process to be outsourced, you must write the memo to the CEO, Jon Duncan, explaining why your team chose to outsource the payroll function.Explain to the CEO the qualitative and quantitative impacts of your team's decision on the business.

Which of the following operations would be the most likely to accept a special order based on seasonality?

When choosing between alternatives, the contribution margin of the next best alternative is called

According to the Theory of Constraints, all production should be subordinated to the bottleneck operation.

If regular sales are given up in order to accept a special order, the lost contribution margin on the regular sales must be subtracted from the contribution margin of the special order to arrive at the total impact on operating income.

Cabells, Inc.has two divisions - Electronics and Appliances.The divisions have provided the following financial information: Cabells' executives are considering the elimination of the Electronics division.If the division is eliminated, the common fixed costs will remain unchanged.Given these data, should the Electronics division be eliminated? Why?

Which of the following is not a short-term tactical benefit of outsourcing a company's operations?

Costs that occur only with the implementation of a particular alternative are referred to as

Depreciation on a factory machine is an example of which of the following types of cost?

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?

Harmony Forge manufactures saddles for show horses.The company has received a special order for 290 saddles for an international competition.Each of these saddles would include the specialized logo of the competition.Last year Harmony produced 710 saddles, and the company has the capacity to produce 1,000 saddles per year.Harmony's saddles normally sell for $650 each, but the special offer is for $179,800 ($620 per saddle).The controller has provided information to management that estimates the variable cost per saddle is $435; fixed manufacturing overhead is $60/saddle.Of the fixed costs assigned to this special order, $15,950 is for the specialized logos, 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?

Which of the following is not a qualitative issue in a special order pricing decision?

The segment margin is the contribution margin of a particular segment less any direct fixed costs.

Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S.One of Channing's warehouses has been showing losses over several quarters, and management is considering closing the warehouse.If the warehouse is closed, only the warehouse manager will be retained by Channing.The warehouse manager's annual salary is $65,000.The warehouse fixtures and equipment have no resale value.Following is the most recent income statement for the warehouse: What will be the impact on Channing's overall operating income if the warehouse is eliminated?

Which of the following will least likely be classified as a direct cost of a business segment?