Exam 8: Using Accounting Information to Make Managerial Decisions

A company can increase its throughput by which of the following actions?

If a special order is being considered when the product normally sells for $10 and relevant costs are $6 to produce a

Adele Truff designs and manufactures a variety of personal products including wallets,purses,and key chains.Adele is proposing to begin manufacturing smart phone covers which sell for $25 each.Adele estimates that monthly sales volume will be 8,500 a.Prepare a traditional monthly income statement for the smart phone cover line. b.Prepare a monthly income statement that highlights the proposed smart phone cover line's segment margin. c.Which income statement would you recommend that Adele use when pitching the proposed line to company managers? Why would you recommend she use this statement?

Power Tools,Inc.produces gas-powered leaf blowers.The company is currently not operating at full capacity.The plant manager is considering making the rewind assembly for the pull cord which is now being purchased from a supplier at $22 each.Power Tools already has the equipment to produce the assembly.The plant manager has analyzed the cost of producing the assemblies and determined that each assembly will require $8 of direct material,$6 of direct labor,and $12 of manufacturing overhead.Two-thirds of the manufacturing overhead is a fixed cost that would not be affected by the decision to manufacture the brackets.Should Paper Moon continue to purchase the brackets or produce them internally?

In evaluating whether or not to accept a special order,decision makers need to consider only quantitative factors.

Your professor is considering retirement.Which of the following will not be relevant in his decision?

Vista Industries manufactures 75,000 digital cameras each year.Vista has been producing the lenses internally.However,late last year the company received an offer to produce the 150,000 lenses the company uses each year for a total contract price of $380,000.When Vista manufactures the lenses internally,direct materials cost $1.05 per lens,direct labor is $.65 per lens,and variable overhead is $.30 per lens.Vista's total overhead is $110,000.If the lens were purchased,$28,000 of fixed overhead could be avoided.Should Vista purchase or produce the lenses,and what is the savings associated with the decision?

When a company accepts an outsourcing offer,managers must take specific action to eliminate the internal costs.

Mantle,Inc.produces two types of wooden mallets,Ash and Oak,in its Miami factory.Data relating to the mallets are given below: A total of 600 hours are available in the Miami facility. Required: a.How many hours will be required to satisfy the demand for both products? b.How much of each product should be produced to maximize Mantle's operating income? Unit 8-4,

Relevant information meets two criteria: 1 it differs between the alternatives and 2 the differences have occurred in the past.

Which of the following costs would be relevant in deciding whether to accept a special order?

When a company accepts an outsourcing offer,managers must take specific action to eliminate internal costs.Which of the following is not a quantitative or qualitative factor managers should consider when accepting an outsourcing offer?

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.In order to maximize the company's total contribution margin,how should Mallory allocate its production capacity between the tents and sleeping bags if necessary,round partial

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: Should Pueblo purchase or produce the screens,and what is the savings associated with the decision?

If the

When an outsourcing decision refers to the components of a manufactured product,it is more commonly called an insource or outsource decision.

Which of the following is not a reason a company would be willing to accept new business at a loss?

Sunk costs are irrelevant in deciding between two alternatives because they are incurred in the past,not the future.

Which of the following is not a criterion of relevant information?

When a company accepts an outsourcing offer,managers must take specific action to eliminate internal costs.Which of the following is not an example of such an action?