Exam 8: Using Accounting Information to Make Managerial Decisions

Because of rising salaries and cost of healthcare and other employee benefits,TJ Manufacturing has decided to outsource one of its non-value added processes.As leader of the team responsible for determining the best process to be outsourced,you must write the memo to the CEO,Jon Duncan,explaining why your team chose to outsource the payroll function.Explain to the CEO the qualitative and quantitative impacts of your team's decision on the business.

Harmony Forge manufactures saddles for show horses.The company has received a special order for 290 saddles for an international competition.Each of these saddles would include the specialized logo of the competition.Last year Harmony produced 710 saddles,and the company has the capacity to produce 1,000 saddles per year.Harmony's saddles normally sell for $650 each,but the special offer is for $179,800 $620 per saddle.The controller has provided information to management that estimates the variable cost per saddle is $435; fixed manufacturing overhead is $60/saddle.Of the fixed costs assigned to this special order,$15,950 is for the specialized logos,the remainder is attributable to costs that will be incurred regardless of whether the special order is produced.What is the operating income generated by the special order?

Which of the following is not relevant to a decision involving the allocation of a single constrained resource among multiple products? aaa.

An opportunity cost is the contribution margin of the next-best alternative use of the facilities.

Costs such as rent and the production manager's salary are examples of which type of cost?

One way companies have tried to combat information overload is through the creation of

Sometimes companies will accept new business at a loss with the expectation that certain customers can influence other potential customers.

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

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

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

To focus on the facts that make a difference in their decisions,managers need to know how to eliminate

Ledbetter,Inc.has the following production and cost data for three of its products,Basic,Standard and Deluxe: A total of 8,000 hours is available each period for the production of the three products.The demand for both products is strong and Ledbetter has orders for 1,200 of Basic,3,000 of Standard and 800 of Deluxe.Ignoring qualitative issues,how many of each product should Ledbetter produce?

Throughput contribution equals ss.sales revenue less direct materials cost.

Moving the delivery of services from within the organization to a provider outside the organization is referred to as

What is an opportunity cost and what is the impact of opportunity cost on a decision to outsource the production of an item?

The Theory of Constraints was developed by Eli Goldratt to m.maximize the performance of a value chain by focusing on constraints that limit an organization's output.

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

Why would a movie theater with some seats still available not sell tickets at a reduced price to moviegoers that show up at the last minute?

Which of the following is a not consideration other than the financial impact that managers should address when choosing whether or not to expand their operations?

Many small businesses hire a local CPA firm to process their payroll.This is an example of