Exam 6: Relevant Information for Decision Making With a Focus

Tucson 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: Processing Product X beyond the split-off point will cause profits to ________.

Super Corporation manufactures two products,Super1 and Super2.The following annual information was gathered: Total annual fixed costs are $25,000.Assume Super Corporation manufactures and sells three units of Super1 for every two units of Super2.The company produced and sold 1,500 units of Super1.What is the operating income (loss)for this year?

Beth is considering leaving her current position to open a coffee shop.Beth's current annual salary is $56,000.Beth is going to invest $200,000 of her own money to start the business.Estimated annual revenue from the new business is $250,000.What is the outlay cost associated with the decision to open the coffee shop?

Somala 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: Processing Product X beyond the split-off point will cause profits to ________.

To make outsourcing services a good option,the services must be reliable,available when needed,and flexible to adapt to changing conditions.

Opportunity cost ________.

Swensen Company is considering the replacement of equipment used in operations.The following data are available: Required: A)Prepare a cost comparison for replacing the old equipment.Use only relevant items and add the items together for the next 6 years. B)Should the old equipment be replaced?

Zach Company produces and sells a product that has a variable costs of $7 per unit and fixed costs of $200,000 per year.If 40,000 units are produced and sold in a year,what is the cost per unit?

Which cost is relevant to the decision whether to process joint products beyond the split-off point?

________ is the number of times the average inventory is sold per year.

Riverside Industries has three product lines: A,B and C.The following information is available: Riverside Industries is thinking about dropping Product C because it is reporting a loss.Assume Riverside Industries drops Product C and does not replace it.What will happen to operating income?

Mary is considering leaving her current position to open an ice cream shop.Mary's current annual salary is $77,000.Annual ice cream shop revenue and costs are estimated at $260,000 and $210,000,respectively.What is Mary's annual opportunity cost of remaining employed in her current position?

In deciding whether to add or delete a product or service,common costs are probably ________.

The big obstacle to outsourcing for most firms has been the cost.

The relevant information for a sell or process further decision for joint products includes the costs incurred before the split-off point.

The gain or loss on the disposal of equipment is determined by ________.

Qualitative information can influence decisions to add or drop a department.

Orange Corporation has a joint process that produces three products: P,G and A.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $25,000.The production level for each product is 10,000 units.Other data follows: If Product P is processed beyond the split-off point,profit will ________.

Phoenix 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: Processing Product Y beyond the split-off point will cause profits to ________.

When making operational decisions,managers should use ________ fixed costs instead of ________ fixed costs.