Question 1

Quantitative factors are outcomes that are measured in numerical terms.

Accepted Answer

A) True 
 B)False

Question 2

The three steps involved in linear programming include all of the following EXCEPT:

Accepted Answer

A) determining the objective 
B) determining the basic relationship 
C) computing the optimal solution 
D) determining the relevant and irrelevant costs 
A) determining the objective 
B) determining the basic relationship 
C) computing the optimal solution 
D) determining the relevant and irrelevant costs

Question 3

Feedback from previous decisions uses historical information and, therefore, is irrelevant for making future predictions.

Accepted Answer

A) True 
 B)False

Question 4

The price quoted for a one-time-only special order may be LESS than the price for a long-term customer.

Accepted Answer

A) True 
 B)False

Question 5

When evaluating a make-or-buy decision, which of the following does NOT need to be considered?

Accepted Answer

A) alternative uses of the production capacity 
B) the original cost of the production equipment 
C) the quality of the supplier's product 
D) the reliability of the supplier's delivery schedule 
A) alternative uses of the production capacity 
B) the original cost of the production equipment 
C) the quality of the supplier's product 
D) the reliability of the supplier's delivery schedule

Question 6

The incremental costs of producing one more unit of product include all of the following EXCEPT:

Accepted Answer

A) direct materials 
B) direct labor 
C) variable overhead costs 
D) fixed overhead costs 
A) direct materials 
B) direct labor 
C) variable overhead costs 
D) fixed overhead costs

Question 7

For short-run product-mix decisions, managers should focus on minimizing total fixed costs.

Accepted Answer

A) True 
 B)False

Question 8

When replacing an old machine with a new machine, the trade in value of the old machine is relevant.

Accepted Answer

A) True 
 B)False

Question 9

Answer the following questions using the information below:
Lugozi Company manufactures three sizes of kitchen appliances: small, medium, and large. Product information is provided below.
     The maximum machine-hours available are 6,000 per week.
-What is the contribution margin per machine-hour for a large chair?

Accepted Answer

A) $2.50 
B) $6.00 
C) $5.40 
D) $3.60 
A) $2.50 
B) $6.00 
C) $5.40 
D) $3.60

Question 10

For make-or-buy decisions, relevant costs include:

Accepted Answer

A) direct material costs plus direct labor costs 
B) incremental costs plus opportunity costs 
C) differential costs plus fixed costs 
D) incremental costs plus differential costs 
A) direct material costs plus direct labor costs 
B) incremental costs plus opportunity costs 
C) differential costs plus fixed costs 
D) incremental costs plus differential costs

Question 11

Answer the following questions using the information below:
Melodee's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:
  
-The relevant cost per jar is:

Accepted Answer

A) $0.28 per jar 
B) $0.38 per jar 
C) $0.72 per jar 
D) $1.00 per jar 
A) $0.28 per jar 
B) $0.38 per jar 
C) $0.72 per jar 
D) $1.00 per jar

Question 12

In evaluating different alternatives, it is useful to concentrate on:

Accepted Answer

A) variable costs 
B) fixed costs 
C) total costs 
D) relevant costs 
A) variable costs 
B) fixed costs 
C) total costs 
D) relevant costs

Question 13

Camera Corner is considering eliminating Model AE2 from its camera line because of losses over the past quarter. The past three months of information for Model AE2 are summarized below:   Overhead costs are 70% variable and the remaining 30% is depreciation of special equipment for model AE2 that has no resale value.
If Model AE2 is dropped from the product line, operating income will:

Accepted Answer

A) increase by $10,000 
B) decrease by $20,000 
C) increase by $30,000 
D) decrease by $10,000 
A) increase by $10,000 
B) decrease by $20,000 
C) increase by $30,000 
D) decrease by $10,000

Question 14

What is the change in operating profits if the one-time-only special order for 1,000 units is accepted for $360 a unit by Kolar?

Accepted Answer

A) $140,000 increase in operating profits 
B) $20,000 increase in operating profits 
C) $20,000 decrease in operating profits 
D) $150,000 decrease in operating profits 
A) $140,000 increase in operating profits 
B) $20,000 increase in operating profits 
C) $20,000 decrease in operating profits 
D) $150,000 decrease in operating profits

Question 15

Full costs of a product are relevant for one-time-only special order pricing decisions.

Accepted Answer

A) True 
 B)False

Question 16

Loft Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
   Loft Lake Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $15 per unit.
Required:
a. For Loft Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?
b. Other than price, what other items should Loft Lake Cabinets consider before accepting this one-time-only special order?
c. How would the analysis differ if there was limited capacity?

Accepted Answer

a. $157.70 = Variable costs ($50 + $62.5

Question 17

Answer the following questions using the information below:
Donald's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows:
   It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Donald's Engine Company has the option of purchasing the part from an outside supplier at $42.50 per unit.
-The maximum price that Donald's Engine Company should be willing to pay the outside supplier is:

Accepted Answer

A) $40 per TE456 part 
B) $41 per TE456 part 
C) $49 per TE456 part 
D) $50 per TE456 part 
A) $40 per TE456 part 
B) $41 per TE456 part 
C) $49 per TE456 part 
D) $50 per TE456 part

Question 18

When deciding to lease a new cutting machine or continue using the old machine, the following costs are relevant EXCEPT the:

Accepted Answer

A) $50,000 cost of the old machine 
B) $20,000 cost of the new machine 
C) $10,000 selling price of the old machine 
D) $3,000 annual savings in operating costs if the new machine is purchased 
A) $50,000 cost of the old machine 
B) $20,000 cost of the new machine 
C) $10,000 selling price of the old machine 
D) $3,000 annual savings in operating costs if the new machine is purchased

Question 19

Replacing an old machine will increase operating income in the long run, but NOT for this year. A manager may choose not to replace the machine if performance evaluations are based on performance over a single year.

Accepted Answer

A) True 
 B)False

Question 20

Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 items are produced, the costs per unit are:
   Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for $120 per unit. The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis Auto accepts the supplier's offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be eliminated.
Required:
a. What is the relevant per unit cost for the original part?
b. Which alternative is best for Lewis Auto Company? By how much?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& The best

Quantitative factors are outcomes that are measured in numerical terms.

The three steps involved in linear programming include all of the following EXCEPT:

Feedback from previous decisions uses historical information and, therefore, is irrelevant for making future predictions.

The price quoted for a one-time-only special order may be LESS than the price for a long-term customer.

When evaluating a make-or-buy decision, which of the following does NOT need to be considered?

The incremental costs of producing one more unit of product include all of the following EXCEPT:

For short-run product-mix decisions, managers should focus on minimizing total fixed costs.

When replacing an old machine with a new machine, the trade in value of the old machine is relevant.

For make-or-buy decisions, relevant costs include:

In evaluating different alternatives, it is useful to concentrate on:

What is the change in operating profits if the one-time-only special order for 1,000 units is accepted for $360 a unit by Kolar?

Full costs of a product are relevant for one-time-only special order pricing decisions.

When deciding to lease a new cutting machine or continue using the old machine, the following costs are relevant EXCEPT the:

Replacing an old machine will increase operating income in the long run, but NOT for this year. A manager may choose not to replace the machine if performance evaluations are based on performance over a single year.

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 11: Decision Making and Relevant Information

Quantitative factors are outcomes that are measured in numerical terms.

The three steps involved in linear programming include all of the following EXCEPT:

Feedback from previous decisions uses historical information and, therefore, is irrelevant for making future predictions.

The price quoted for a one-time-only special order may be LESS than the price for a long-term customer.

When evaluating a make-or-buy decision, which of the following does NOT need to be considered?

The incremental costs of producing one more unit of product include all of the following EXCEPT:

For short-run product-mix decisions, managers should focus on minimizing total fixed costs.

When replacing an old machine with a new machine, the trade in value of the old machine is relevant.

For make-or-buy decisions, relevant costs include:

In evaluating different alternatives, it is useful to concentrate on:

What is the change in operating profits if the one-time-only special order for 1,000 units is accepted for $360 a unit by Kolar?

Full costs of a product are relevant for one-time-only special order pricing decisions.

When deciding to lease a new cutting machine or continue using the old machine, the following costs are relevant EXCEPT the:

Replacing an old machine will increase operating income in the long run, but NOT for this year. A manager may choose not to replace the machine if performance evaluations are based on performance over a single year.

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters