Exam 8: Using Accounting Information to Make Managerial Decisions

According to the theory of constraints,which of the following is $\textbf{ not }$ a step required to maximize and improve the performance of a value chain?

Which of the following is $\textbf{ not }$ a qualitative issue that must be considered before reaching a decision to outsource?

The theory of constraints seeks to maximize

Your friend purchased a non-refundable ticket to a popular Broadway play for Friday night.Yesterday she was invited to spend Friday on the lake with a group of sorority sisters.Her only cost will be for personal items such as lunch.The lake is two hours away from her apartment and the play is another hour in the opposite direction.She knows that if she goes to the lake,she will not get back in time to attend the play.Which of the following is $\textbf{ not }$ a relevant cost in making her decision on whether to go to the play or to the lake?

Which of the following should $\textbf{ not }$ influence a manager's decision in deciding whether or not to close a division?

Sienna Company produces earrings,bracelets,and necklaces that are in high demand.Following is information for each of these products: Sienna has 2,000 machine hours available each month.Demand for each item exceeds Sienna's capacity to produce the item.In order to maximize the company's total contribution margin,in what sequence should Sienna fill orders for the three products?

Which of the following laws prohibits companies from engaging in price discrimination?

London, Inc. uses 2,000 units of Part 8G3 each year in the manufacture of one of its products. The company currently produces the part internally, but an outside supplier has offered to provide the part at a price of $15 per part. If London chooses to purchase the part from the outside supplier, one half of it’s the fixed manufacturing overhead will be eliminated. London’s standard unit cost of producing the part is listed below. Required Ignoring qualitative factors, should London continue to make the parts internally or purchase them from the outside supplier? Why?

Barber Manufacturing currently makes 2,000 high-end kaleidoscopes each year. Barber has been manufacturing all parts of the units. However, the company has found a manufacturing company that can provide the tubes at a price of $14 each. Since the company’s machine that molds the tubes is getting old, the company is considering purchasing the tubes. If the company purchases the tubes, the machine will be idle. Barber’s standard cost of the molding process for one unit is listed below. Required Should Barber purchase the tubes or continue manufacturing them? Why?

Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S.One of Channing's warehouses has been showing losses over several quarters,and management is considering closing the warehouse.If the warehouse is closed,only the warehouse manager will be retained by Channing.The warehouse manager's annual salary is $65,000.The warehouse fixtures and equipment have no resale value.Following is the most recent income statement for the warehouse: What would be the impact on Channing's overall operating income if the warehouse is eliminated?

Which of the following is $\textbf{ not }$ a criterion of relevant information?

When a company accepts an outsourcing offer,managers must take specific action to eliminate internal costs.Which of the following is $\textbf{ not }$ an example of such an action?

Elton’s Electronics is a wholesale distributer for TVs and other electronics and appliances. The selling price of TV Model 83G7 is $799. The following standard cost data per Model 83G7 includes $300 direct material, $30 direct labor and $200 manufacturing overhead 75% variable, 25% fixed. Elton has received a special order for 200 Model 83G7s at a price of $450 each. The only additional cost of accepting the special order is a sales commission of $9 per unit. The special order is to a retail store that will not be in competition with any other Elton customers. Ignoring qualitative factors, should Elton accept the special order?

If a special order results in a positive contribution margin of $8 when the contribution margin for regular orders is $15,which of the following decisions is the most likely to be chosen?

Complete the table below by placing an "X" under each heading that classifies the cost as relevant or irrelevant.

The costs that should be included in an outsourcing decision are the:

Kentucky Distributors has two divisions - Northern and Southern.The divisions have provided the following financial information: Kentucky's executives are considering the elimination of the Northern division.If the division is eliminated,the common fixed costs will remain unchanged.Given these data,should the Northern division be eliminated? Why?

Once viable alternatives have been identified by a decision maker,which of the following is not a step that should be followed?

Managers becoming overwhelmed by the huge amount of information available to them is referred to as

Mallory Manufacturing produces thermal tents and sleeping bags.The company's products are in high demand due to the quality and durability of the products.Mallory estimates it could sell 600 tents per month and 600 sleeping bags per month.Following is information for each of these products: Mallory has 800 machine hours available each month. In order to maximize the company’s total contribution margin, how should Mallory allocate its production capacity between the tents and sleeping bags if necessary, round partial units down to the next nearest full unit?