Question 1

Incremental analysis helps decision makers to understand

Accepted Answer

A) the sunk costs involved in their decision. 
B) the impact of their choices. 
C) the classification of costs. 
D) the materiality of a situation. 
A) the sunk costs involved in their decision. 
B) the impact of their choices. 
C) the classification of costs. 
D) the materiality of a situation.

Question 2

The Robinson-Patman Act of 1936 prohibits companies from engaging in price discrimination - that is, offering the same item to different customers at different prices.

Accepted Answer

A) True 
 B)False

Question 3

Moving the production of goods from within the organization to a provider outside the organization is referred to as

Accepted Answer

A) transfer pricing. 
B) product diffusion. 
C) segment slicing. 
D) outsourcing. 
A) transfer pricing. 
B) product diffusion. 
C) segment slicing. 
D) outsourcing.

Question 4

ABC Company produces three products, Standard, Deluxe and Superior, with the following characteristics:   The company has only 1,500 machine hours available each period.If demand exceeds the company's capacity, in what sequence should orders for the three products be filled to maximize the company's total contribution margin?

Accepted Answer

A) Standard first, Deluxe second, Superior third 
B) Deluxe first, Standard second, Superior third 
C) Superior first, Standard second, Deluxe third 
D) Standard first, Superior second, Deluxe third 
A) Standard first, Deluxe second, Superior third 
B) Deluxe first, Standard second, Superior third 
C) Superior first, Standard second, Deluxe third 
D) Standard first, Superior second, Deluxe third

Question 5

If the unit cost of direct materials is $20, direct labor is $12, variable overhead is $2, avoidable fixed costs are $6,000, unavoidable fixed costs are $5,000 and sunk costs are $9,000, what is the total relevant cost for 300 products?

Accepted Answer

A) $15,200 
B) $16,200 
C) $24,200 
D) $25,200 
A) $15,200 
B) $16,200 
C) $24,200 
D) $25,200

Question 6

Your friend purchased a non-refundable ticket to a popular Broadway play for Friday night.Yesterday she was invited to spend Friday on the lake with a group of sorority sisters.Her only cost will be for personal items such as lunch.The lake is two hours away from her apartment and the play is another hour in the opposite direction.She knows that if she goes to the lake, she will not get back in time to attend the play.Which of the following is not a relevant cost in making her decision on whether to go to the play or to the lake?

Accepted Answer

A) The price of the ticket to the play 
B) The price of eating out at the lake 
C) The price of renting an umbrella at the lake 
D) The price of driving to the play 
A) The price of the ticket to the play 
B) The price of eating out at the lake 
C) The price of renting an umbrella at the lake 
D) The price of driving to the play

Question 7

When an outsourcing decision refers to the components of a manufactured product, it is more commonly called an insource or outsource decision.

Accepted Answer

A) True 
 B)False

Question 8

When multiple products share a constrained resource, the constrained resource should be allocated first to the product with

Accepted Answer

A) the lowest contribution margin. 
B) the lowest contribution margin per unit. 
C) the highest contribution margin per constrained resource. 
D) the highest contribution margin. 
A) the lowest contribution margin. 
B) the lowest contribution margin per unit. 
C) the highest contribution margin per constrained resource. 
D) the highest contribution margin.

Question 9

Vista Industries manufactures 75,000 digital cameras each year.Vista has been producing the lenses internally.However, late last year the company received an offer to produce the 150,000 lenses the company uses each year for a total contract price of $380,000.When Vista manufactures the lenses internally, direct materials cost $1.05 per lens, direct labor is $0.65 per lens, and variable overhead is $0.30 per lens.Vista's total overhead is $110,000.If the lens were purchased, $28,000 of fixed overhead could be avoided.Should Vista purchase or produce the lenses, and what is the savings associated with the decision?

Accepted Answer

A) Purchase the lenses and save $52,000 
B) Produce the lenses and save $52,000. 
C) Purchase the lenses and save $2,000. 
D) Produce the lenses and save $2,000. 
A) Purchase the lenses and save $52,000 
B) Produce the lenses and save $52,000. 
C) Purchase the lenses and save $2,000. 
D) Produce the lenses and save $2,000.

Question 10

When a customer requests a special order and the supplier has capacity constraints, reducing the special order is not normally an option.

Accepted Answer

A) True 
 B)False

Question 11

Given the following data, what is the total relevant cost of internal production of 2,000 products?

Accepted Answer

A) $34,000 
B) $40,000 
C) $48,000 
D) $49,000 
A) $34,000 
B) $40,000 
C) $48,000 
D) $49,000

Question 12

Which of the following is not a qualitative issue that must be considered before reaching a decision to outsource?

Accepted Answer

A) Reliability of the outsource provider 
B) Stability of the price offered by the outside supplier 
C) Opportunity costs of alternatives 
D) Quality of the outsourced product 
A) Reliability of the outsource provider 
B) Stability of the price offered by the outside supplier 
C) Opportunity costs of alternatives 
D) Quality of the outsourced product

Question 13

Throughput contribution equals

Accepted Answer

A) sales revenue less direct materials cost. 
B) sales revenue less product costs. 
C) direct material plus direct labor. 
D) direct material plus traceable manufacturing overhead. 
A) sales revenue less direct materials cost. 
B) sales revenue less product costs. 
C) direct material plus direct labor. 
D) direct material plus traceable manufacturing overhead.

Question 14

Power Tools, Inc.produces gas-powered leaf blowers.The company is currently not operating at full capacity.The plant manager is considering making the rewind assembly for the pull cord which is now being purchased from a supplier at $22 each.Power Tools already has the equipment to produce the assembly.The plant manager has analyzed the cost of producing the assemblies and determined that each assembly will require $8 of direct material, $6 of direct labor, and $12 of manufacturing overhead.Two-thirds 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?

Accepted Answer

@#IMG-DLM& Power Tool should make the as

Question 15

A type of analysis that helps decision makers understand the impact of their choices is referred to as incremental analysis.

Accepted Answer

A) True 
 B)False

Question 16

The Fair Trade Act of 1936 prohibits companies from engaging in price discrimination - that is, offering the same item to different customers at different prices.

Accepted Answer

A) True 
 B)False

Question 17

Your company has realized that some managers are making rash decisions which have created negative consequences for the entire company.You have been assigned to a team responsible for training managers on making good decisions based on a relevant-cost decision model.Your team has done some research and found that most management decisions can be approached using a model that asked five questions.List each of the steps in the five-step approach in this chapter and provide a brief description.

Accepted Answer

Step 1 What is the decision to be made?

Question 18

Managers becoming overwhelmed by the huge amount of information available to them is referred to as

Accepted Answer

A) unavoidable overload. 
B) information overload. 
C) phenomenon overload. 
D) irrelevance overload. 
A) unavoidable overload. 
B) information overload. 
C) phenomenon overload. 
D) irrelevance overload.

Question 19

In evaluating the relevance of specific information, which of the following must the decision maker know

Accepted Answer

A) the classification of any relevant costs. 
B) the behavior of all costs. 
C) the context of the decision. 
D) all relevant and irrelevant information. 
A) the classification of any relevant costs. 
B) the behavior of all costs. 
C) the context of the decision. 
D) all relevant and irrelevant information.

Question 20

If a product has a positive segment margin but is not as profitable as other products, what should managers do? What if the segment margin is negative?

Accepted Answer

If the segment margin is positive, the o

Incremental analysis helps decision makers to understand

The Robinson-Patman Act of 1936 prohibits companies from engaging in price discrimination - that is, offering the same item to different customers at different prices.

Moving the production of goods from within the organization to a provider outside the organization is referred to as

If the unit cost of direct materials is $20, direct labor is $12, variable overhead is $2, avoidable fixed costs are $6,000, unavoidable fixed costs are $5,000 and sunk costs are $9,000, what is the total relevant cost for 300 products?

When an outsourcing decision refers to the components of a manufactured product, it is more commonly called an insource or outsource decision.

When multiple products share a constrained resource, the constrained resource should be allocated first to the product with

When a customer requests a special order and the supplier has capacity constraints, reducing the special order is not normally an option.

Given the following data, what is the total relevant cost of internal production of 2,000 products?

Which of the following is not a qualitative issue that must be considered before reaching a decision to outsource?

Throughput contribution equals

A type of analysis that helps decision makers understand the impact of their choices is referred to as incremental analysis.

The Fair Trade Act of 1936 prohibits companies from engaging in price discrimination - that is, offering the same item to different customers at different prices.

Managers becoming overwhelmed by the huge amount of information available to them is referred to as

In evaluating the relevance of specific information, which of the following must the decision maker know

If a product has a positive segment margin but is not as profitable as other products, what should managers do? What if the segment margin is negative?

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Filters

Exam 8: Using Accounting Information to Make Managerial Decisions

Incremental analysis helps decision makers to understand

The Robinson-Patman Act of 1936 prohibits companies from engaging in price discrimination - that is, offering the same item to different customers at different prices.

Moving the production of goods from within the organization to a provider outside the organization is referred to as

If the unit cost of direct materials is $20, direct labor is $12, variable overhead is $2, avoidable fixed costs are $6,000, unavoidable fixed costs are $5,000 and sunk costs are $9,000, what is the total relevant cost for 300 products?

When an outsourcing decision refers to the components of a manufactured product, it is more commonly called an insource or outsource decision.

When multiple products share a constrained resource, the constrained resource should be allocated first to the product with

When a customer requests a special order and the supplier has capacity constraints, reducing the special order is not normally an option.

Given the following data, what is the total relevant cost of internal production of 2,000 products?

Which of the following is not a qualitative issue that must be considered before reaching a decision to outsource?

Throughput contribution equals

A type of analysis that helps decision makers understand the impact of their choices is referred to as incremental analysis.

The Fair Trade Act of 1936 prohibits companies from engaging in price discrimination - that is, offering the same item to different customers at different prices.

Managers becoming overwhelmed by the huge amount of information available to them is referred to as

In evaluating the relevance of specific information, which of the following must the decision maker know

If a product has a positive segment margin but is not as profitable as other products, what should managers do? What if the segment margin is negative?

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Filters