Exam 8: Using Accounting Information to Make Managerial Decisions

Which of the following is not a short-term tactical benefit of outsourcing a company's operations?

As products are made,capacity is used up.Managers must allocate the constrained resource to products so as to maximize the company's contribution margin. Required: a.List three limited resources that can constrain business operations. b.How should managers determine the best way to allocate constrained resources among products or operations? Unit 8-4,

Which of the following terms indicate that costs are not directly caused by the cost object?

Outsourcing is a relatively new approach to doing business.

Accepting special orders may produce additional revenues,but may also result in some negative consequences.Discuss the quantitative and qualitative factors that impact the decision to accept a special order.

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

When a company continues to manufacture a product,but changes the geographical location of production,it is called

All variable costs are relevant and all fixed costs are irrelevant.

Sunk cost are classified as

When multiple products share a constrained resource,the way to allocate the resource is to compute the

Which of the following would be least likely classified as a direct cost of a business segment?

The Inland Corporation manufactures 1,000 motors that are used in the production of its go-karts.Inland has been approached by an outside supplier that will sell the motor to Inland for $39 each.Inland's cost to manufacture each motor are as follows: Direct material $25 Direct labor $8 Variable overhead $4 Fixed overhead $6 Total $43 All fixed overhead is unavoidable,and is allocated based on machine hours.The facilities that are used to manufacture the motors have no alternative uses. Required: a.Should Inland continue to manufacture the motors? b.Would your answer change if Inland could lease the facilities previously used to produce the motors for $4,800 per year? Unit 8-3,

The segment margin is the contribution margin of a particular segment less any direct fixed costs.

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

Mountaineer,Inc.currently makes 6,000 pairs of weatherproof hiking boots each year.The boots sell for $119.Mountaineer has been manufacturing the boots and applying the weatherproofing as the final process before packaging.However,the company is concerned about the costs associated with the weatherproofing process.The company is concerned that the EPA will not approve of their disposal of the residue from the process,resulting in heavy monetary penalties.Mountaineer has found a manufacturing company that can waterproof the boots and package them at a cost of $18 each.If the company outsources the waterproofing and packaging of the boots,its insurance premiums will be reduced.Mountaineer's standard cost of the waterproofing and packaging process for one

Calculations which show the additional impact of one alternative over another are referred to as

Logan Corporation is considering a eliminating a department that has incurred losses over the past several years.The department has a contribution margin of $32,000 per year.The fixed costs charged to the department total $37,000.$15,000 of the fixed costs is avoidable.If the department is eliminated,what would be the effect on the corporation's operating income?

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

Costs that occur only with the implementation of a particular alternative are referred to as

Gary Brown Manufacturing makes single kayaks,double kayaks,and lightweight competitive kayaks.The double kayak line has been showing losses for several years,and management is considering dropping the line.Recent income statements have been very similar to the following information which was prepared for the most recent year: Of the fixed costs,$393,750 is common costs that have been allocated equally to each product line.What will total operating income be if Brown drops the double kayak line?