Exam 8: Using Accounting Information to Make Managerial Decisions

Betty Hopper,controller for Diamond Manufacturing Company,has prepared the following financial information for the most recent period showing profitability of its three divisions: The factory insurance and advertising assigned to the furniture division is avoidable if the division is discontinued.Depreciation will remain unchanged if a division is dropped.Discontinuing furniture will reduce the utilities by $800. Required: a.Prepare an analysis showing whether Furniture should be eliminated. b.If the Furniture division is eliminated,what will be effect on the overall profit for Diamond? Unit 8-5,

R&W Manufacturing Company produces men's hiker shorts.The selling price of the shorts is $35.The following standard cost data per

Which of the following operations would be the most likely to accept a special order based on seasonality?

Sky Mountain Bakery makes doughnuts,cupcakes,and scones that are in high demand by local restaurants and hotels.Following is information for each of these products: Sky Mountain has 2,000 machine hours available each month.Demand for each item exceeds Sky Mountain's capacity to produce the item.In order to maximize the company's total contribution margin,in what sequence should Sky Mountain fill orders for the three products?

Which of the following would not be a relevant cost in a special order of expensive clocks?

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

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

Incremental analysis helps decision makers to understand

Murphy's,Inc.has the following production and cost data for two of its products,Standard and Deluxe: A total of 80,000 hours is available each period for the production of the two products.The demand for both products is strong and Murphy will be able to sell as many of either product as it can produce.Ignoring qualitative issues,which of the two products should Murphy produce?

When multiple products share a constrained resource,the constrained resource should be allocated first to the product with

Knoll Manufacturing has manufacturing facilities in several locations.One of Knoll's facilities has been showing losses over several quarters,and management is considering closing the facility.If the facility is closed,only two part-time employees will be retained by Knoll.The annual wage of each part-time worker is $14,400.This particular location has been in operation for many years.As a result,the manufacturing equipment has no resale value.Following is the most recent income statement for the facility: What would be the impact on Knoll's overall operating income if the manufacturing facility is eliminated?

A characteristic of irrelevant information is that

Leonora Industries manufactures light fixtures for home,retail,and industrial customers.The retail 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,$315,000 is common costs that have been allocated equally to each product line.What will total operating income be if Leonora drops the retail line?

Which of the following is not a qualitative issue in a special order pricing decision?

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?

Glade Industries manufactures and bottles energy drinks.Last year the company made and bottled 2,500,000

Variable costs associated with a segment's sales may not always be avoidable.

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

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?

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