Exam 5: Relevant Information for Decision Making With a Focus

Rainbow Company is considering the production of a new product.Rainbow Company has the following data available: What is the total fixed cost of the product over the product life cycle?

________ is the additional cost resulting from producing and selling one additional unit.

________ is (are)defined as any method used for making a choice.

In decision making situations,________ aspects may dominate quantitative aspects in many decisions.

Companies use cost-plus pricing for products where management actions can influence the market price.

Stangle Company manufactures ties.When 28,000 ties are produced,the costs per unit are: The ties normally sell for $22 each.The company has received a special order for 2,000 ties at $10.00 per tie.The company has excess capacity. Required: Compute the amount by which the operating income would change if the order were accepted.

In determining whether to purchase a labor-saving machine,extreme resistance to the machine by employees would be a(n)________.

Under absorption costing,all ________ costs are product or inventoriable costs.

Which of the following statements is correct?

Santa Company reported the following information for its only product: Santa Company uses the absorption approach.What is the product cost per unit?

Washington Company has the following data about its only product: Washington Company uses the absorption approach.What is the gross margin?

The difference between the gross margin and the market price is the target cost for a new product.

Predatory pricing occurs when a firm sets ________.

Imprecise but relevant information can be useful.

Dakota Company has been producing and selling 42,000 hats a year.The Dakota Corporation has the capacity to produce 52,000 hats.The following data is available: If a special order is accepted for 10,000 hats at a price of $25 per unit,net income would ________.

Prices based on variable costs represent a contribution approach to pricing.

Each month Newton Company produces 30,000 units of a product that has variable costs of $70 per unit.Total fixed costs for the month are $990,000.A special order is received for 1,000 units at a price of $77 per unit.Newton Company has adequate capacity for the special order.If Newton Company accepts the special order,what is the profit to Newton Company?

Ohio Company has the following data about its only product: Ohio Company uses the absorption approach.What is the manufacturing cost of goods sold?

The absorption costing approach to the income statement is used by companies for external financial reporting.

Bunch Company is considering the production of a new product.Bunch Company has the following data available: What is the total cost of the product over the product life cycle?