Exam 8: Using Accounting Information to Make Managerial Decisions

The costs that should be included in an outsourcing decision are

Avoidable costs are those costs that

Which of the following is not a criterion of relevant information?

A characteristic of irrelevant information is that

Common costs are

An auto body shop is trying to decide whether or not to purchase a new piece of diagnostic equipment.Which of the following costs would not be relevant to the decision?

Delta Airlines uses Wipro, an Indian company, to handle its customer service calls.This is an example of

Ellis Dover is a scout for a Major League Baseball team based in Phoenix, Arizona.Ellis needs to travel to Los Angeles, California on June 1 to perform a variety of professional functions prior to the team travelling to Los Angeles to play.If Ellis flies, he could catch a 6A.m.flight on June 1.In order to perform all of his professional responsibilities, Ellis will need to spend the night and catch a flight on June 2 to return to Phoenix.If Ellis flies, he will need to rent a car for $38 per day.To cover meals and other incidental expenses, Ellis will receive $45 per day (per diem) for each day he works out of town.Flights between Phoenix and Los Angeles can be purchased for $89 one way. Phoenix is approximately 300 miles from Los Angeles, a 5-hour drive at speed limits permitted on the freeways connecting the two cities.If he drives from Phoenix to Los Angeles, Ellis would need to leave the afternoon of May 31 and would be reimbursed $.50 per mile.He would need to spend 2 nights in a hotel, the night of May 31 and the night of June 1.He would return to Phoenix by car on June 2.The hotel used by the team charges $160 per night.What is the relevant cost of flying?

When a company accepts an outsourcing offer, managers must take specific action to eliminate the internal costs.

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 terms indicate that costs are directly caused by the cost object?

The formula for calculating the contribution margin per constrained resource is Contribution Margin Per Unit divided by Units Produced.

ABC Corporation makes mattresses in three sizes: twin, queen and king.Twin mattresses have shown a loss for several years, similar to the operating loss shown below: None of the fixed costs are avoidable.What will be the total operating income for the corporation if twin mattresses are discontinued?

Leonora Industries manufactures light fixtures for home, retail, and industrial customers.The retail 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, $315,000 is common costs that have been allocated equally to each product line.What will total operating income be if Leonora drops the retail line?

Other than the financial impact, which of the following is not one of the considerations that managers should address when choosing whether or not to expand their operations?

Pueblo Production Company manufactures 50,000 high-definition televisions each year.Pueblo is considering purchasing the glass screens from an outside source rather than producing them internally.The following data relate to the glass screens: Should Pueblo purchase or produce the screens, and what is the savings associated with the decision?

If a special order results in a positive contribution margin of $8 when the contribution margin for regular orders is $15, which of the following decisions is the most likely to be chosen?

Once viable alternatives have been identified by a decision maker, which of the following is not a step that should be followed?

Throughput contribution equals

Offshoring means moving a company's business processes to a foreign country.