Question 1

Which of the following is not a qualitative issue that must be considered before reaching a decision to outsource?

Accepted Answer

A) Quality of the outsourced product 
B) Number of employees terminated 
C) Ability to bring outsourced item back in house 
D) Speed of the outsourced product 
A) Quality of the outsourced product 
B) Number of employees terminated 
C) Ability to bring outsourced item back in house 
D) Speed of the outsourced product

Question 2

In response to a growing awareness of various allergies,Barb's Better Breads BBB developed baking mixes which contain a unique blend of gluten-free flours and starches,including almond meal,organic flax seeds and arrowroot.The breads are also baked in a preheated,heavy,lidded pan which creates a better crust and texture in gluten-free breads.BBB has been approached by a large restaurant chain to supply the bread used in restaurants throughout the region.Due to demand,almond meal is often in limited supply.Pertinent information for 3 types of bread follows:
   Required 
a.Assuming no raw material constraints and unlimited demand for all 3 types of bread,what type of bread would maximize the company's contribution margin? Why?
b.Assume that based on typical customer demand,BBB will sell 12,000 loaves of cinnamon raisin,8,000 loaves of ciabatta,and 10,000 loaves of crusty french.What will the company's contribution margin be?
c.BBB's almond meal supplier has announced a shortage of almond meal.As a result,BBB will only be able to purchase 20,000 pounds of almond meal.How many loaves of each type of bread should the company bake? What will the company's contribution margin be?

Accepted Answer

a. @#IMG-DLM& Make and sell cinnamon raisin loaves

Question 3

The Theory of Constraints seeks to maximize throughput contribution,which equals sales revenue less direct materials cost.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) sunk costs. 
B) recurring costs. 
C) relevant costs. 
D) fixed costs. 
A) sunk costs. 
B) recurring costs. 
C) relevant costs. 
D) fixed costs.

Question 5

The formula for calculating the contribution margin per constrained resource is Contribution Margin Per

Accepted Answer

A) True 
 B)False

Question 6

Costs such as rent and the production manager's salary are non-differential,but are relevant.

Accepted Answer

A) True 
 B)False

Question 7

Newport Manufacturing makes and sells backyard fire pits.Each fire pit regularly sells for $269.The following cost data per
a.What is the minimum selling price Newport should negotiate for the special order?
b.What are three factors other than relevant costs that Newport should consider concerning this special order?
Unit 8-2,

Accepted Answer

a.[$100 + $75 + $64 x .75 + $10] = $233

Question 8

A common mistake managers make in deciding to close a division is

Accepted Answer

A) allowing allocated fixed costs to influence the decision. 
B) allowing qualitative issues to influence the decision. 
C) allowing avoidable costs to influence the decision. 
D) both allowing qualitative issues to influence the decision,and avoidable costs to influence the decisions. 
A) allowing allocated fixed costs to influence the decision. 
B) allowing qualitative issues to influence the decision. 
C) allowing avoidable costs to influence the decision. 
D) both allowing qualitative issues to influence the decision,and avoidable costs to influence the decisions.

Question 9

Instead of maximizing income,as measured by traditional accounting methods,the theory of constraints seeks to maximize gg.contribution income.

Accepted Answer

A) throughput contribution. 
B) quality. 
C) gross profit. 
A) throughput contribution. 
B) quality. 
C) gross profit.

Question 10

Moving the production of goods from within the organization to a provider outside the organization is referred to as

Accepted Answer

A) transfer pricing. 
B) product diffusion. 
C) segment slicing. 
D) outsourcing. 
A) transfer pricing. 
B) product diffusion. 
C) segment slicing. 
D) outsourcing.

Question 11

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.If Mallory allocates its production capacity between the tents and sleeping bags so that it maximizes the company's contribution margin,what will the contribution margin be?

Accepted Answer

A) $14,000 
B) $13,765 
C) $13,550 
D) $19,500 
A) $14,000 
B) $13,765 
C) $13,550 
D) $19,500

Question 12

Sanderson's Woodworking Company is considering the addition of a new line of quilt frames to its current product lines.If the new quilt frames are added to Sanderson's production,contribution margin of the other products is expected to drop by $2,000.Sanderson has summarized the projected revenue and cost for the new line of frames.
   Required: 
a.If Sanderson adds the new quilt frame to its line of products,what will be the increase in operating income?
b.What are three issues that Sanderson should consider before adding the new line?
Unit 8-1,

Accepted Answer

a. Selling price $250 Less variable cost

Question 13

Place and "X" in the column that corresponds to the cost classification for each of the following scenarios.Some items may fit in more than one column.

Accepted Answer

The answer of Place and "X" in the column that...

Question 14

Pueblo Production Company manufactures 50,000 high-definition televisions each year.Pueblo is considering purchasing the glass screens from an outside source rather than producing them internally.The following data relate to the glass screens:   What is the total relevant cost to internally produce 50,000 glass screens?

Accepted Answer

A) $1,417,500 
B) $1,467,900 
C) $1,484,500 
D) $1,625,000 
A) $1,417,500 
B) $1,467,900 
C) $1,484,500 
D) $1,625,000

Question 15

When a company outsources a product,it is easier to control product quality than if the product is produced internally.

Accepted Answer

A) True 
 B)False

Question 16

Throughput contribution equals oo.sales revenue less fixed costs.

Accepted Answer

A) sales revenue less product costs. 
B) sales revenue less direct materials costs. 
C) sales revenues less manufacturing overhead. 
A) sales revenue less product costs. 
B) sales revenue less direct materials costs. 
C) sales revenues less manufacturing overhead.

Question 17

ABC Corporation makes mattresses in three sizes: twin,queen and king.Twin mattresses have shown a loss for several years,similar to the operating loss shown below:   None of the fixed cost is avoidable.What will total operating income for the corporation be if twin mattresses are discontinued?

Accepted Answer

A) $50,000 loss 
B) $15,000 loss 
C) $30,000 profit 
D) $105,000 profit 
A) $50,000 loss 
B) $15,000 loss 
C) $30,000 profit 
D) $105,000 profit

Question 18

Because depreciation is a fixed cost that is not avoidable,it is irrelevant in making an outsourcing decision.

Accepted Answer

A) True 
 B)False

Question 19

In determining whether or not to eliminate a segment,differential costs are relevant to the decision.

Accepted Answer

A) True 
 B)False

Question 20

According to the Theory of Constraints,all production should be subordinated to the bottleneck operation.

Accepted Answer

A) True 
 B)False

Which of the following is not a qualitative issue that must be considered before reaching a decision to outsource?

The Theory of Constraints seeks to maximize throughput contribution,which equals sales revenue less direct materials cost.

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

The formula for calculating the contribution margin per constrained resource is Contribution Margin Per

Costs such as rent and the production manager's salary are non-differential,but are relevant.

A common mistake managers make in deciding to close a division is

Instead of maximizing income,as measured by traditional accounting methods,the theory of constraints seeks to maximize gg.contribution income.

Moving the production of goods from within the organization to a provider outside the organization is referred to as

Place and "X" in the column that corresponds to the cost classification for each of the following scenarios.Some items may fit in more than one column.

When a company outsources a product,it is easier to control product quality than if the product is produced internally.

Throughput contribution equals oo.sales revenue less fixed costs.

ABC Corporation makes mattresses in three sizes: twin,queen and king.Twin mattresses have shown a loss for several years,similar to the operating loss shown below: None of the fixed cost is avoidable.What will total operating income for the corporation be if twin mattresses are discontinued?

Because depreciation is a fixed cost that is not avoidable,it is irrelevant in making an outsourcing decision.

In determining whether or not to eliminate a segment,differential costs are relevant to the decision.

According to the Theory of Constraints,all production should be subordinated to the bottleneck operation.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

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Exam 8: Using Accounting Information to Make Managerial Decisions

Which of the following is not a qualitative issue that must be considered before reaching a decision to outsource?

The Theory of Constraints seeks to maximize throughput contribution,which equals sales revenue less direct materials cost.

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

The formula for calculating the contribution margin per constrained resource is Contribution Margin Per

Costs such as rent and the production manager's salary are non-differential,but are relevant.

A common mistake managers make in deciding to close a division is

Instead of maximizing income,as measured by traditional accounting methods,the theory of constraints seeks to maximize gg.contribution income.

Moving the production of goods from within the organization to a provider outside the organization is referred to as

Place and "X" in the column that corresponds to the cost classification for each of the following scenarios.Some items may fit in more than one column.

When a company outsources a product,it is easier to control product quality than if the product is produced internally.

Throughput contribution equals oo.sales revenue less fixed costs.

ABC Corporation makes mattresses in three sizes: twin,queen and king.Twin mattresses have shown a loss for several years,similar to the operating loss shown below: None of the fixed cost is avoidable.What will total operating income for the corporation be if twin mattresses are discontinued?

Because depreciation is a fixed cost that is not avoidable,it is irrelevant in making an outsourcing decision.

In determining whether or not to eliminate a segment,differential costs are relevant to the decision.

According to the Theory of Constraints,all production should be subordinated to the bottleneck operation.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters