Exam 6: Relevant Information for Decision Making With a Focus

LeBron Corporation manufactures two products,Simple and Complex.The following information was gathered: Total fixed costs are $18,000.Assume LeBron Corporation can produce and sell either 10,000 units of Simple or 5,000 units of Complex at full capacity.How many units of Simple and Complex should LeBron Corporation produce and sell to maximize profits?

Only unit costs computed using the same level of production should be compared.

Company XYZ is a small company with limited expertise with information technology.Company XYZ has a contract with Company ZZ.Company ZZ handles all of Company XYZ's information technology needs.For Company XYZ,this is an example of ________.

Sanama Industries has three product lines: A,B and C.The following annual information is available: Sanama Industries is thinking about dropping Product C because it is reporting a loss.Assume Sanama Industries drops Product C and the space formerly used to produce Product C is rented out for $15,000 per year.What will happen to operating income?

The key to determining the financial difference between two alternative courses of action is to identify the ________.

Schumann Company manufactures two products: Hats and Caps.The following information is available: Total fixed costs are $52,000 per year.Labor hour capacity is 15,000 hours per year. Required: A)Which product has the highest contribution margin per unit? B)Which product has the highest contribution margin per unit in light of the production constraint? C)Assume Schumann Company can only produce one product.Which product should be produced? What will net income be?

Superbowl Corporation manufactures two products,Footballs and Helmets.The following annual information was gathered: Total annual fixed costs are $25,000.Assume Superbowl Corporation can sell either 8,000 footballs or 18,000 helmets at full capacity.Which product should Superbowl Corporation sell to maximize profits?

The ________ is the juncture in manufacturing where the joint products become individually identifiable.

Bermuda Triangle Corporation has a joint process that produces three products: X,Y and Z.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $100,000.Other data follows: To maximize profits,the corporation should process ________ further.

________ are relevant in deciding whether to add or delete a department.

Crispy Company manufactures a part for its production cycle.The annual costs per unit for 5,000 units of the part are as follows: The fixed factory overhead costs are unavoidable.Another company has offered to sell 5,000 units of the same part to Crispy Company for $15 per unit.The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year.Crispy Company should ________.

________ costs are costs that continue even if an operation is halted.

Christina is considering leaving her current position to open a music store.Christina's current annual salary is $45,000.Annual music store revenue and costs are estimated at $250,000 and $210,000,respectively.If Christina decides to open the music store,what is the change in her annual income?

A scarce resource restricts or constrains the production or sale of a product.

Nestle Company paid $130,000 for a machine used to mill oats.The annual contribution margin from oat sales is $60,000.The machine could be sold for $80,000.The opportunity cost of producing the oats is ________.

When deciding whether to add or delete a department,managers should keep the department as long as ________ from the department exceeds ________.

Unavoidable costs do not include common costs.

Generally,companies use aggregate measures of performance when conducting performance evaluations of managers.

When a company has scarce resources,managers should emphasize the product that has ________.

Deadwood Company is considering replacing a machine that is presently used in the production of a product.In the replacement decision,________ is a sunk cost.