Question 1

In product-mix decisions:

Accepted Answer

A) always focus on maximizing total contribution margin 
B) focus on the product with the greatest contribution margin per machine-hour 
C) focus on the full costs of the product 
D) never focus on the short-term, but include only long-term considerations 
A) always focus on maximizing total contribution margin 
B) focus on the product with the greatest contribution margin per machine-hour 
C) focus on the full costs of the product 
D) never focus on the short-term, but include only long-term considerations

Question 2

When there is a constraining resource, the firm should attempt to maximize sales of the product or service with the greatest contribution margin per unit.

Accepted Answer

A) True 
 B)False

Question 3

Determining which products should be produced when the plant is operating at full capacity is referred to as:

Accepted Answer

A) an outsourcing analysis 
B) production scheduling analysis 
C) a product-mix decision 
D) a short-run focus decision 
A) an outsourcing analysis 
B) production scheduling analysis 
C) a product-mix decision 
D) a short-run focus decision

Question 4

________ would be a consideration in a make-or-buy decision.

Accepted Answer

A) Excess capacity 
B) Rental income from unused facilities 
C) Variable factory overhead 
D) All of the above are correct. 
A) Excess capacity 
B) Rental income from unused facilities 
C) Variable factory overhead 
D) All of the above are correct.

Question 5

When opportunity costs exist, they are always relevant.

Accepted Answer

A) True 
 B)False

Question 6

Answer the following questions using the information below:
Kolar Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Kolar Manufacturing has excess capacity. The following per unit data apply for sales to regular customers:
  
-What is the full cost of the product per unit?

Accepted Answer

A) $220 
B) $340 
C) $510 
D) $170 
A) $220 
B) $340 
C) $510 
D) $170

Question 7

The sum of all costs incurred in all business functions in the value chain (product design, manufacturing, marketing, and customer service, for example)is known as the:

Accepted Answer

A) business cost 
B) full product cost 
C) gross product cost 
D) multiproduct cost 
A) business cost 
B) full product cost 
C) gross product cost 
D) multiproduct cost

Question 8

The textbook discusses a five-step decision process. Briefly explain each of the five steps.

Accepted Answer

The five step decision process is (a)obt

Question 9

Roberto owns a small body shop. His major costs include labor, parts, and rent. In the decision-making process, these costs are considered to be:

Accepted Answer

A) fixed 
B) qualitative factors 
C) quantitative factors 
D) variable 
A) fixed 
B) qualitative factors 
C) quantitative factors 
D) variable

Question 10

Historical costs are helpful:

Accepted Answer

A) for making future predictions 
B) for decision making 
C) because they are quantitative 
D) None of these answers is correct. 
A) for making future predictions 
B) for decision making 
C) because they are quantitative 
D) None of these answers is correct.

Question 11

Explain what revenues and costs are relevant when choosing among alternatives.

Accepted Answer

Future amounts that differ among alterna

Question 12

Answer the following questions using the information below:
Victoria, Inc., is considering replacing a machine. The following data are available:
  
-The difference between the original cost of an asset and the accumulated depreciation is known as the:

Accepted Answer

A) historical cost 
B) market value 
C) book value 
D) depreciable cost 
A) historical cost 
B) market value 
C) book value 
D) depreciable cost

Question 13

If a company is deciding whether to outsource a part, the reliability of the supplier is an important factor to consider.

Accepted Answer

A) True 
 B)False

Question 14

Product-mix decisions are typically short-run decisions.

Accepted Answer

A) True 
 B)False

Question 15

Costs are relevant to a particular decision if they:

Accepted Answer

A) are variable costs 
B) are fixed costs 
C) differ across the alternatives being considered 
D) remain unchanged across the alternatives being considered 
A) are variable costs 
B) are fixed costs 
C) differ across the alternatives being considered 
D) remain unchanged across the alternatives being considered

Question 16

Answer the following questions using the information below:
Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
   Of the fixed factory overhead costs, $60,000 is avoidable.
-Assuming no other use of their facilities, the highest price that Piels should be willing to pay for 10,000 units of the part is:

Accepted Answer

A) $420,000 
B) $280,000 
C) $340,000 
D) $360,000 
A) $420,000 
B) $280,000 
C) $340,000 
D) $360,000

Question 17

The formal process of choosing between alternatives is known as a(n):

Accepted Answer

A) relevant model 
B) decision model 
C) alternative model 
D) prediction model 
A) relevant model 
B) decision model 
C) alternative model 
D) prediction model

Question 18

Managers tend to favor alternatives that make their own performance look better.

Accepted Answer

A) True 
 B)False

Question 19

A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

Accepted Answer

A) the book value of the old equipment 
B) depreciation expense on the old equipment 
C) the loss on the disposal of the old equipment 
D) the current disposal price of the old equipment 
A) the book value of the old equipment 
B) depreciation expense on the old equipment 
C) the loss on the disposal of the old equipment 
D) the current disposal price of the old equipment

Question 20

Answer the following questions using the information below:
Heck's Kitchens is approached by Mr. Louis Cifer, 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:
   Heck's Kitchens has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $50 per unit.
-Other than price, what other items should Heck's Kitchens consider before accepting this one-time-only special order?

Accepted Answer

A) reaction of shareholders 
B) reaction of existing customers to the lower price offered to Mr. Louis Cifer 
C) demand for cherry cabinets 
D) price is the only consideration 
A) reaction of shareholders 
B) reaction of existing customers to the lower price offered to Mr. Louis Cifer 
C) demand for cherry cabinets 
D) price is the only consideration

In product-mix decisions:

When there is a constraining resource, the firm should attempt to maximize sales of the product or service with the greatest contribution margin per unit.

Determining which products should be produced when the plant is operating at full capacity is referred to as:

________ would be a consideration in a make-or-buy decision.

When opportunity costs exist, they are always relevant.

The sum of all costs incurred in all business functions in the value chain (product design, manufacturing, marketing, and customer service, for example)is known as the:

The textbook discusses a five-step decision process. Briefly explain each of the five steps.

Roberto owns a small body shop. His major costs include labor, parts, and rent. In the decision-making process, these costs are considered to be:

Historical costs are helpful:

Explain what revenues and costs are relevant when choosing among alternatives.

Answer the following questions using the information below: Victoria, Inc., is considering replacing a machine. The following data are available: -The difference between the original cost of an asset and the accumulated depreciation is known as the:

If a company is deciding whether to outsource a part, the reliability of the supplier is an important factor to consider.

Product-mix decisions are typically short-run decisions.

Costs are relevant to a particular decision if they:

The formal process of choosing between alternatives is known as a(n):

Managers tend to favor alternatives that make their own performance look better.

A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

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

In product-mix decisions:

When there is a constraining resource, the firm should attempt to maximize sales of the product or service with the greatest contribution margin per unit.

Determining which products should be produced when the plant is operating at full capacity is referred to as:

________ would be a consideration in a make-or-buy decision.

When opportunity costs exist, they are always relevant.

The sum of all costs incurred in all business functions in the value chain (product design, manufacturing, marketing, and customer service, for example)is known as the:

The textbook discusses a five-step decision process. Briefly explain each of the five steps.

Roberto owns a small body shop. His major costs include labor, parts, and rent. In the decision-making process, these costs are considered to be:

Historical costs are helpful:

Explain what revenues and costs are relevant when choosing among alternatives.

Answer the following questions using the information below: Victoria, Inc., is considering replacing a machine. The following data are available: -The difference between the original cost of an asset and the accumulated depreciation is known as the:

If a company is deciding whether to outsource a part, the reliability of the supplier is an important factor to consider.

Product-mix decisions are typically short-run decisions.

Costs are relevant to a particular decision if they:

The formal process of choosing between alternatives is known as a(n):

Managers tend to favor alternatives that make their own performance look better.

A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

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