Exam 5: Relevant Information for Decision Making With a Focus

Nebraska Company produces and sells 20,000 units at $20 per unit.Nebraska Company's product cost is calculated as follows: A total of 500 setups at a cost of $120 per setup are required to produce the 20,000 units.Nebraska Company has received a special order to sell 5,000 units at $10 per unit.Nebraska Company has excess capacity available,but these 5,000 units would require 60 setups.If Nebraska Company accepts the special order,what is Nebraska's increase in net income?

The contribution margin is computed using variable manufacturing costs and variable selling and administrative costs.

Price elasticity measures the ________.

The total manufacturing cost and full cost approaches to pricing often fail to highlight different cost behavior patterns.

Today Company has the following data about its only product: Today Company uses the contribution approach.What is the operating income?

Nevada Company has the following data about its only product: Nevada Company uses the contribution approach.What is the contribution margin?

With perfect competition,marginal revenue is the additional revenue resulting from the sale of an additional unit.

A company will bid near the minimum sales price to establish a presence in new markets or with a new customer.

In imperfect competition,marginal revenue usually increases as volume increases.

Each month Fig Company produces 11,000 units of a product that sells for $18 per unit,and has variable costs of $12 per unit.Total fixed costs for the month are $77,000.A special order is received for 5,000 units at a price of $14 per unit.Fig Company has adequate capacity for the special order.If Fig Company accepts the special order,what is the profit to Fig Company?

Minnesota Company has the following data about its only product: Assume there is excess capacity.The company has received a special order for 1,000 units at $80.00 per unit.If the special order is accepted,what will be the effect on net income?

Historical data may have a direct bearing on a decision made today.

In decision making,relevance is more crucial than ________.

McEnroe Company has budgeted the following costs for the production of its only product: McEnroe Company has a target profit of $60,000.What is the average target markup percentage for setting prices as a percentage of total manufacturing costs?

Which factor does NOT influence pricing decisions?

Colorado Company has the following data about its only product: Colorado Company uses the absorption approach.What is the product cost per unit?

The accountant's role in decision making involves providing the relevant information for decision makers.

If a small price increase causes large volume declines,demand is highly inelastic.

If perfectly accurate and relevant information is not available for decision making,the accountant should consider using information that is ________.

In a special order decision,fixed costs that do not differ between two alternatives are ________.