Question 1

The make-or-buy decision can apply to decisions about all of the following except:

Accepted Answer

A) Internal auditing. 
B) Security. 
C) Human resource management. 
D) Maintenance and repair. 
E) Strategic management. 
A) Internal auditing. 
B) Security. 
C) Human resource management. 
D) Maintenance and repair. 
E) Strategic management.

Question 2

A truck, costing $25,000 and uninsured, was wrecked the very first day it was used. It can either be disposed of for $5,000 cash and be replaced with a similar truck costing $27,000, or rebuilt for $20,000 and be brand new as far as operating characteristics and looks are concerned. The best choice provides a net cost savings of:

Accepted Answer

A) $2,000. 
B) $5,000. 
C) $7,000. 
D) $12,000. 
E) Some other amount. 
A) $2,000. 
B) $5,000. 
C) $7,000. 
D) $12,000. 
E) Some other amount.

Question 3

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 4

Which of the following items does NOT have to be considered when evaluating a make-or-buy decision?

Accepted Answer

A) The reliability of the supplier's delivery schedule. 
B) Quality of the supplier's product. 
C) Net book value of the production equipment used to make the item in question. 
D) Contribution margin generated by an alternative use of the production equipment. 
E) Financial stability of the supplier. 
A) The reliability of the supplier's delivery schedule. 
B) Quality of the supplier's product. 
C) Net book value of the production equipment used to make the item in question. 
D) Contribution margin generated by an alternative use of the production equipment. 
E) Financial stability of the supplier.

Question 5

Which of the following statements regarding "opportunity costs" is TRUE?

Accepted Answer

A) These costs are recorded routinely by cost accounting systems. 
B) These costs relate to the benefit lost or foregone when a chosen option (course of action) precludes the benefits from an alternative option. 
C) These costs are generally deductible for federal income tax purposes. 
D) In terms of most short-run decisions, they are irrelevant. 
E) They are usually considered a sunk cost associated with one or more decision alternatives. 
A) These costs are recorded routinely by cost accounting systems. 
B) These costs relate to the benefit lost or foregone when a chosen option (course of action) precludes the benefits from an alternative option. 
C) These costs are generally deductible for federal income tax purposes. 
D) In terms of most short-run decisions, they are irrelevant. 
E) They are usually considered a sunk cost associated with one or more decision alternatives.

Question 6

When using relevant cost analysis, it is a common mistake for untrained managers to include in their analysis all the following except:

Accepted Answer

A) Sunk costs. 
B) Allocated fixed costs. 
C) Average fixed costs. 
D) Unit variable costs. 
E) Total fixed costs. 
A) Sunk costs. 
B) Allocated fixed costs. 
C) Average fixed costs. 
D) Unit variable costs. 
E) Total fixed costs.

Question 7

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is:

Accepted Answer

A) The variable manufacturing cost of the component. 
B) The total manufacturing cost of the component. 
C) The total variable cost of the component. 
D) The fixed manufacturing cost of the component. 
E) Zero. 
A) The variable manufacturing cost of the component. 
B) The total manufacturing cost of the component. 
C) The total variable cost of the component. 
D) The fixed manufacturing cost of the component. 
E) Zero.

Question 8

Which of the following costs would be relevant in short-term decision making?

Accepted Answer

A) Incremental fixed costs. 
B) All product-related costs. 
C) Total variable costs that are the same in the considered alternatives. 
D) Cost of fixed assets to be used in the alternatives. 
E) Opportunity costs that are the same in the considered decision alternatives. 
A) Incremental fixed costs. 
B) All product-related costs. 
C) Total variable costs that are the same in the considered alternatives. 
D) Cost of fixed assets to be used in the alternatives. 
E) Opportunity costs that are the same in the considered decision alternatives.

Question 9

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 10

Which one of the following is most descriptive of a strategic analysis conducted as part of a decision analysis?

Accepted Answer

A) Quantitative. 
B) Customer focus. 
C) Short-term orientation. 
D) Individual product focus. 
E) Differential costing. 
A) Quantitative. 
B) Customer focus. 
C) Short-term orientation. 
D) Individual product focus. 
E) Differential costing.

Question 11

Opportunity costs:

Accepted Answer

A) Result in a cash outlay. 
B) Unless zero are always relevant for decision making. 
C) Should be maximized for the best decision. 
D) Are recorded in the accounting records. 
E) Are the result of a completed event or transaction. 
A) Result in a cash outlay. 
B) Unless zero are always relevant for decision making. 
C) Should be maximized for the best decision. 
D) Are recorded in the accounting records. 
E) Are the result of a completed event or transaction.

Question 12

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 13

The Multi Resource Company manufactures two lines of washing machines, Regular and Deluxe. The contribution margin of a Regular model is $110 and for Deluxe Model is $175. The company has two departments, Assembly and Testing. The Regular Model requires 3 hours to assemble, while a Deluxe Model requires 4 hours. The total time available in Assembly is 12,000 hours. In the Testing Department, it requires 2.5 hours to test a Regular Model and 1.5 hours to test a Deluxe Model. A total of 6,000 hours of testing time is available. The optimum production plan for Multi Resource is:

Accepted Answer

A) 2,400 Regular Models 
B) 3,000 Deluxe Models 
C) 1,091 Regular Models and 2,182 Deluxe Models 
D) 4,000 Deluxe Models 
E) 4,000 Regular Models 
A) 2,400 Regular Models 
B) 3,000 Deluxe Models 
C) 1,091 Regular Models and 2,182 Deluxe Models 
D) 4,000 Deluxe Models 
E) 4,000 Regular Models

Question 14

Three Stars Inc. manufactures prefabricated houses. The firm's president, Michelle Brown, is interested in determining whether it would be better to manufacture the doors used in the houses or to buy them from a supplier. The following information, based on production of 500 doors, has been gathered to help determine the best option:   Of the fixed overhead costs, Three Stars estimates that it could save $5 per unit of miscellaneous fixed overhead if it purchases the doors from a supplier and allocates all other fixed costs elsewhere. The cost to purchase 500 doors would be $55,000.
Required: Should Three Stars make or purchase the doors? What is the savings per unit?

Accepted Answer

Answer may vary
Feedback: @#IMG-DLM& Outside Purch

Question 15

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 16

The Tee Box is a golf shop inside the clubhouse of a North Carolina golf course. Derek Dunlop, owner of the Tee Box, was deciding how much shelf space to devote to four different golf ball types. Derek had a maximum front shelf space of fifteen feet to devote to the four golf ball types. He wanted a minimum of three feet and a maximum of seven feet of front shelf for each golf ball type. Appropriate data on the four ball types follow:   The daily contribution per foot of front shelf space for Straight is calculated to be:

Accepted Answer

A) $190.00 
B) $140.00 
C) $120.00 
D) $130.00 
E) $170.00 
A) $190.00 
B) $140.00 
C) $120.00 
D) $130.00 
E) $170.00

Question 17

Employee morale and social responsibility represent two examples of:

Accepted Answer

A) Qualitative decision factors. 
B) Differential factors. 
C) Opportunity costs. 
D) Sunk cost expenditures. 
E) Relevant costs. 
A) Qualitative decision factors. 
B) Differential factors. 
C) Opportunity costs. 
D) Sunk cost expenditures. 
E) Relevant costs.

Question 18

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 19

The contribution per foot of front shelf space per day for Limeade is:

Accepted Answer

A) $165.00. 
B) $162.00. 
C) $154.00. 
D) $134.40. 
E) $153.90. 
A) $165.00. 
B) $162.00. 
C) $154.00. 
D) $134.40. 
E) $153.90.

Question 20

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

The make-or-buy decision can apply to decisions about all of the following except:

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

Which of the following items does NOT have to be considered when evaluating a make-or-buy decision?

Which of the following statements regarding "opportunity costs" is TRUE?

When using relevant cost analysis, it is a common mistake for untrained managers to include in their analysis all the following except:

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is:

Which of the following costs would be relevant in short-term decision making?

Which one of the following is most descriptive of a strategic analysis conducted as part of a decision analysis?

Opportunity costs:

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

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

Employee morale and social responsibility represent two examples of:

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

The contribution per foot of front shelf space per day for Limeade is:

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?

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

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

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Exam 11: Decision Making With a Strategic Emphasis

The make-or-buy decision can apply to decisions about all of the following except:

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

Which of the following items does NOT have to be considered when evaluating a make-or-buy decision?

Which of the following statements regarding "opportunity costs" is TRUE?

When using relevant cost analysis, it is a common mistake for untrained managers to include in their analysis all the following except:

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is:

Which of the following costs would be relevant in short-term decision making?

Which one of the following is most descriptive of a strategic analysis conducted as part of a decision analysis?

Opportunity costs:

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

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

Employee morale and social responsibility represent two examples of:

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

The contribution per foot of front shelf space per day for Limeade is:

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?

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

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