Exam 8: Using Accounting Information to Make Managerial Decisions

Complete the table below by placing an "X" under each heading that classifies the costs as avoidable or unavoidable in a decision to accept a special order.

If a product has a positive segment margin but is not as profitable as other products,what should managers do? What if the segment margin is negative?

When choosing between alternatives,the contribution margin of the next-best alternative is called

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

A dance studio is considering a plan to add ballroom dance to its offerings.Which of the following is a not relevant consideration in this decision?

Range Rider Industries manufactures chairs and tables that are in high demand by local office furniture stores.Following is information for each of these products: Range Rider has 900 machine hours available each month.The demand for chairs is 560

Jerry Mounds,controller for Pearl Distributing,has prepared the following financial information for the most recent period showing profitability the of its three departments : The factory rent of $3,200 assigned to Department C is avoidable if the department is eliminated.Depreciation will remain unchanged if a department is dropped.Discontinuing Department C will reduce the utilities by $600. Required: Prepare an analysis showing whether Department C should be eliminated.

Toyota,a Japanese company,has a manufacturing plant in Canton,Mississippi.If Toyota were to contract with Ford Motor Company to manufacture its autos at a Ford plant in the

Which of the following is not one of the top ten reasons companies outsource their operations?

Which of the following combinations results in relevant information?

Information overload can lead to

ABC Corporation produces three products,Standard,Deluxe and Superior,with the following characteristics: The company has only 1,800 machine hours available each period.If demand exceeds the company's capacity,in what sequence should orders for the three products be filled to maximize the company's total contribution margin?

Saguaro Company is a leading producer of disposable chop sticks and other utensils.One of the company's major product lines is high-quality chop sticks which are sold to some of the country's best Asian restaurants,including large national chains.Each set of chop sticks is sold at a price of $0.38 per pair.To maintain its high-quality image,Saguaro uses a thick premium wood,a special varnish,and individually wraps each pair of chop sticks.Based on annual production of 5,000,000 sets of chop sticks,Saguaro's cost for producing a pair of chop sticks is as follows: Sharon Steele is opening a new Asian restaurant in her hometown.She recently contacted one of Saguaro's top salespeople,Simon Green,about purchasing utensils for her new restaurant.Simon described Saguaro's products,emphasizing the high-quality materials and processes the company uses.Sharon is looking for ways to lower her operating costs,so after hearing Simon describe Saguaro's products,she told him that all she wants are 20,000 unwrapped chop sticks.Sharon told Simon she is willing to pay $0.09 per chop stick $.18 per pair. Required a.Based on Sharon's offer of $0.09 per chop stick,should Saguaro accept Sharon's order? Saguaro currently has excess production capacity and can easily accommodate Sharon's order in the production schedule. b.Since Sharon wants simple chop sticks,Simon is exploring using a lighter-weight wood for her order.He has found a suitable product that will cost $.02 per chop stick.If Saguaro uses this lighter-weight wood for Sharon's order,should the company accept Sharon's order at a price of $0.09 per chop stick? Saguaro currently has excess production capacity and can easily accommodate Sharon's order in the production schedule. c.After visiting with Sharon,Simon received a fax from one of Spain's top Asian restaurants.The restaurant's normal utensil supplier suffered some earthquake damage and is unable to ship the restaurant's order of 20,000 pairs of chop sticks this month.The restaurant's owner is asking if Saguaro can fill a one-time rush order of 20,000 pairs of chop sticks.The restaurant is willing to pay an 8% price premium to expedite the order.If Saguaro accepts the order,it will incur $2,250 in export taxes and shipping.Should Saguaro accept the Spanish restaurant's offer? d.What qualitative issues should Saguaro consider as it evaluates both Sharon's order and the Spanish restaurant's order? Are these issues different for the two orders?

When a customer requests a special order and the supplier has capacity constraints,which of the following is most likely not an option for the customer?

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?

Your company has realized that some managers are making rash decisions which have created negative consequences for the entire company.You have been assigned to a team responsible for training managers on good decisions based on a relevant-cost decision model.Your team has done some research and found that most management decisions can be approached using a model that asked five questions.List and discuss the five step approach in Chapter 8.

The Robinson-Patman Act of 1936 prohibits companies from engaging in price discrimination - that is,offering the same item to different customers at different prices.

The variable costs associated with the segment's sales are always

List the two criteria information meet to be considered relevant to decision making and explain the difference between sunk cost and opport

In evaluating the relevance of specific information,which of the following must the decision maker know