Question 1

The value chain analysis used in connection with the make-or-buy decision often leads a firm to make use of:

Accepted Answer

A) Activity-based costing (AB
C) . 
B) Cost-volume profit (CVP) analysis. 
C) Outsourcing options. 
D) Relevant cost-based pricing. 
E) Value stream accounting. 
A) Activity-based costing (AB
C) . 
B) Cost-volume profit (CVP) analysis. 
C) Outsourcing options. 
D) Relevant cost-based pricing. 
E) Value stream accounting.

Question 2

Determination of the optimum short-term product mix needs to include an analysis of:

Accepted Answer

A) Fully absorbed costs. 
B) Production constraints. 
C) Sales-mix costs. 
D) Revenue forecasts. 
E) Joint manufacturing costs. 
A) Fully absorbed costs. 
B) Production constraints. 
C) Sales-mix costs. 
D) Revenue forecasts. 
E) Joint manufacturing costs.

Question 3

Which one of the following issues would least likely be addressed during the regular review of product profitability?

Accepted Answer

A) Which product managers should be rewarded? 
B) Which products are most profitable? 
C) Which products provide the greatest contribution margin per unit of the scarce resource? 
D) Which products should be promoted and advertised most aggressively? 
E) Are the products priced properly? 
A) Which product managers should be rewarded? 
B) Which products are most profitable? 
C) Which products provide the greatest contribution margin per unit of the scarce resource? 
D) Which products should be promoted and advertised most aggressively? 
E) Are the products priced properly?

Question 4

Southern Company packages and sells nuts in cans. Pecans, cashews, Brazil nuts, hazelnuts, and peanuts are packaged individually as well in combinations and mixtures. Southern wants to package the nuts so that it can maximize its operating profit while considering market demand. In addition, there are limited supplies for some types of nuts. The technique that Southern should employ is:

Accepted Answer

A) Statistical analysis. 
B) Correlation and regression analysis. 
C) Discounted cash flow (DCF) analysis. 
D) Transportation algorithms. 
E) Linear programming. 
A) Statistical analysis. 
B) Correlation and regression analysis. 
C) Discounted cash flow (DCF) analysis. 
D) Transportation algorithms. 
E) Linear programming.

Question 5

All the following are characteristic of relevant costs except:

Accepted Answer

A) They are generally variable. 
B) They are not committed. 
C) They are different in amount for different options. 
D) They are costs that will be incurred in the future. 
E) They are inventory-related costs. 
A) They are generally variable. 
B) They are not committed. 
C) They are different in amount for different options. 
D) They are costs that will be incurred in the future. 
E) They are inventory-related costs.

Question 6

The firm of Miller, Lombardi, and York was recently formed by the merger of two companies providing accounting services. York's business was providing personal financial planning, while Miller and Lombardi conducted audits of small governmental units and provided tax-planning and preparation for several commercial firms. The combined firm has leased new offices and acquired several microcomputers that are used by the professional staff in each area of service. However, in the short run the firm does not have the financial resources to acquire computers for all of its professional staff.
The expertise of the professional staff can be divided into three distinct areas that match the services provided by the firm, i.e., tax preparation and tax planning, insurance and investments, and auditing. However, since the merger, the new firm has had to turn away business in all three areas of service. One of the problems is that while the total number of staff seems adequate, the staff members are not completely interchangeable. Limited financial resources do not permit hiring any new staff in the near future, and therefore, the supply of staff is restricted in each area.
Rick Oliva has been assigned the responsibility of allocating staff and computers to the various engagements. The management has given Oliva the objective of maximizing revenues in a manner consistent with maintaining a high level of professional service in each of the areas of service. Management's time is billed at $200 per hour and staff's time is billed at $140 per hour for those with experience, and $100 per hour for inexperienced staff. Pam Wren, a member of the staff, recently completed a course in managerial accounting at the local university. She suggested to Oliva, based on material covered in the course she took, that he use linear programming to assign the appropriate staff and computers to the various engagements.
Required:
1. Identify and discuss the assumptions underlying the linear programming model.
2. Explain the reasons why linear programming would be appropriate for Miller, Lombardi, and York to use in making staff assignments.
3. Identify and discuss the data that would be needed to develop a linear programming model for Miller, Lombardi, and York.
4. Discuss objectives other than revenue maximization that Rick Oliva should consider before making staff allocations.

Accepted Answer

Answer may vary
Feedback: 1. The linear

Question 7

Depreciation expense is a relevant cost in a decision only in the context of:

Accepted Answer

A) Time value of money. 
B) Amortized values. 
C) Reducing the tax liability of the organization. 
D) Determining sunk costs associated with the decision problem. 
E) Financial accounting. 
A) Time value of money. 
B) Amortized values. 
C) Reducing the tax liability of the organization. 
D) Determining sunk costs associated with the decision problem. 
E) Financial accounting.

Question 8

The point where M = 2 and S = 3 would:

Accepted Answer

A) Minimize total cost. 
B) Minimize total variable cost. 
C) Lie in a corner. 
D) Be a feasible point. 
E) Be the optimal solution point. 
A) Minimize total cost. 
B) Minimize total variable cost. 
C) Lie in a corner. 
D) Be a feasible point. 
E) Be the optimal solution point.

Question 9

Under the assumption that the company would like to minimize total cost, what should the company do, and what are the total cost savings in the first year?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 10

Product X's sales value at the split-off point is:

Accepted Answer

A) $306,000. 
B) $135,000. 
C) $340,000. 
D) $150,000. 
E) $233,000. 
A) $306,000. 
B) $135,000. 
C) $340,000. 
D) $150,000. 
E) $233,000.

Question 11

Operating at or near full capacity will require a firm considering a special sales order to potentially recognize the:

Accepted Answer

A) Opportunity cost from lost sales. 
B) Value of full employment. 
C) The use of operating leverage. 
D) Need for good management. 
E) Importance of facility-level cost drivers. 
A) Opportunity cost from lost sales. 
B) Value of full employment. 
C) The use of operating leverage. 
D) Need for good management. 
E) Importance of facility-level cost drivers.

Question 12

When deciding whether to discontinue a segment of a business, managers should focus on:

Accepted Answer

A) The amount of operating income per unit produced by the segment. 
B) The amount of contribution margin per direct labor hour in the segment. 
C) How corporate-level administrative costs would be redistributed if the segment were eliminated. 
D) Equipment from the segment that could go idle if the segment were discontinued. 
E) The total contribution margin generated by the segment relative to any traceable (avoidable) fixed costs associated with the segment. 
A) The amount of operating income per unit produced by the segment. 
B) The amount of contribution margin per direct labor hour in the segment. 
C) How corporate-level administrative costs would be redistributed if the segment were eliminated. 
D) Equipment from the segment that could go idle if the segment were discontinued. 
E) The total contribution margin generated by the segment relative to any traceable (avoidable) fixed costs associated with the segment.

Question 13

Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets in order to keep the plant busy at a time when production is expected to be slower than normal. Home Select has agreed, but only if the price is reduced to $42. Listed below are some data prepared by Marchant. The special order can be produced within available capacity, and will be made in a single batch.   There are no variable marketing costs associated with the special order, but Ruby Marchant, the president of the firm, has spent $1,500 during the past month trying to get Home Select to purchase this special order.
Required: Determine the effect of the special order, if taken, on Marchant's total profit.

Accepted Answer

Answer may vary
Feedback: @#IMG-DLM& Total relevan

Question 14

When deciding to purchase a new cutting machine or continue using the existing machine, the following costs are all relevant EXCEPT the:

Accepted Answer

A) $60,000 cost of the old machine. 
B) $30,000 cost of the new machine. 
C) $15,000 disposal (salvage) value of the old machine. 
D) $4,000 annual savings in operating costs if the new machine is purchased. 
E) Maintenance costs, which are expected to be less under the new machine. 
A) $60,000 cost of the old machine. 
B) $30,000 cost of the new machine. 
C) $15,000 disposal (salvage) value of the old machine. 
D) $4,000 annual savings in operating costs if the new machine is purchased. 
E) Maintenance costs, which are expected to be less under the new machine.

Question 15

The following unit cost information pertained to the trumpet division of WGN Music Co. and was based on monthly demand and sales of 100 units:   Assume that the Trumpet Division was evaluating whether or not it would accept a special order for ten trumpets at $500 per unit.
Required:
1. Calculate total relevant cost per unit.
2. Should WGN accept the special order; why or why not?

Accepted Answer

Answer may vary
Feedback: 1. @#IMG-DLM&

Question 16

Which one of the following is most relevant to a manufacturing equipment-replacement decision?

Accepted Answer

A) Original cost of the old equipment. 
B) Disposal (salvage) value of the old equipment. 
C) Gain or loss on the disposal of the old equipment. 
D) Original cost less accumulated depreciation of the old equipment. 
E) A lump-sum write-off amount from the disposal of the old equipment. 
A) Original cost of the old equipment. 
B) Disposal (salvage) value of the old equipment. 
C) Gain or loss on the disposal of the old equipment. 
D) Original cost less accumulated depreciation of the old equipment. 
E) A lump-sum write-off amount from the disposal of the old equipment.

Question 17

Special sales orders:

Accepted Answer

A) Are frequent. 
B) Typically come directly from the customer rather than normal sales or distribution channels. 
C) Commonly represent a large part of a firm's overall business. 
D) Can never be profitable to a firm in the short run. 
E) Generally speaking do not involve long-term pricing considerations. 
A) Are frequent. 
B) Typically come directly from the customer rather than normal sales or distribution channels. 
C) Commonly represent a large part of a firm's overall business. 
D) Can never be profitable to a firm in the short run. 
E) Generally speaking do not involve long-term pricing considerations.

The value chain analysis used in connection with the make-or-buy decision often leads a firm to make use of:

Determination of the optimum short-term product mix needs to include an analysis of:

Which one of the following issues would least likely be addressed during the regular review of product profitability?

All the following are characteristic of relevant costs except:

Depreciation expense is a relevant cost in a decision only in the context of:

The point where M = 2 and S = 3 would:

Under the assumption that the company would like to minimize total cost, what should the company do, and what are the total cost savings in the first year?

Product X's sales value at the split-off point is:

Operating at or near full capacity will require a firm considering a special sales order to potentially recognize the:

When deciding whether to discontinue a segment of a business, managers should focus on:

When deciding to purchase a new cutting machine or continue using the existing machine, the following costs are all relevant EXCEPT the:

Which one of the following is most relevant to a manufacturing equipment-replacement decision?

Special sales orders:

Cost Management and Strategy

Implementing Strategy: the Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 11: Decision Making With a Strategic Emphasis

The value chain analysis used in connection with the make-or-buy decision often leads a firm to make use of:

Determination of the optimum short-term product mix needs to include an analysis of:

Which one of the following issues would least likely be addressed during the regular review of product profitability?

All the following are characteristic of relevant costs except:

Depreciation expense is a relevant cost in a decision only in the context of:

The point where M = 2 and S = 3 would:

Under the assumption that the company would like to minimize total cost, what should the company do, and what are the total cost savings in the first year?

Product X's sales value at the split-off point is:

Operating at or near full capacity will require a firm considering a special sales order to potentially recognize the:

When deciding whether to discontinue a segment of a business, managers should focus on:

When deciding to purchase a new cutting machine or continue using the existing machine, the following costs are all relevant EXCEPT the:

Which one of the following is most relevant to a manufacturing equipment-replacement decision?

Special sales orders:

Cost Management and Strategy

Implementing Strategy: the Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters