Question 1

Factors used to decide whether to outsource a part include:

Accepted Answer

A) the supplier's cost of direct materials 
B) if the supplier is reliable 
C) the original cost of equipment currently used for production of that part 
D) past design costs used to develop the current composition of the part 
A) the supplier's cost of direct materials 
B) if the supplier is reliable 
C) the original cost of equipment currently used for production of that part 
D) past design costs used to develop the current composition of the part

Question 2

Doggie Dinner, Inc., currently manufactures three different types of scientifically balanced dog food. The firm is considering eliminating one of the three products. What factors should be taken into account in making this decision?

Accepted Answer

In deciding whether or not to eliminate

Question 3

Computer Products produces two keyboards, Regular and Special. Regular keyboards have a unit contribution margin of $128, and Special keyboards have a unit contribution margin of $720. The demand for Regulars exceeds Computer Product's production capacity, which is limited by available machine-hours and direct manufacturing labor-hours. The maximum demand for Special keyboards is 80 per month. Management desires a product mix that will maximize the contribution toward fixed costs and profits. Direct manufacturing labor is limited to 1,600 hours a month and machine-hours are limited to 1,200 a month. The Regular keyboards require 20 hours of labor and 8 machine-hours. Special keyboards require 34 labor-hours and 20 machine-hours.
Let R represent Regular keyboards and S represent Special keyboards. The correct set of equations for the keyboard production process is:

Accepted Answer

A)  	Maximize:	$128R + $720S	
Constraints:
	Labor-hours:	20R + 34S ≤ 1,600
	Machine-hours:	8R + 20S ≤ 1,200
	Special:	S ≤ 80
	S ≥ 0
	Regular:	R ≥ 0 
B)  	Maximize:	$128R + $720S
Constraints:
	Labor-hours:	20R + 34S ≥ 1,600
	Machine-hours:	8R + 20S ≥≤ 1,200
	Special:	S ≥ 80
	S ≥ 0
	Regular:	R ≥ 0 
C)  	Maximize:	$720S + $128R
Constraints:
	Labor-hours:	20R + 8S ≤ 1,600
	Machine-hours:	34R + 20S ≤ 1,200
	Special:	S ≤ 80
	S ≥ 0
	Regular:	R ≥ 0 
D)  	Maximize:	$128R + $720S
Constraints:
	Labor-hours:	20R + 34S ≤ 1,600
	Machine-hours:	8R + 20S ≤ 1,200
	Special:	S ≥ 80
	S ≤ 0
	Regular:	R ≤ 0 
A)  	Maximize:	$128R + $720S	
Constraints:
	Labor-hours:	20R + 34S ≤ 1,600
	Machine-hours:	8R + 20S ≤ 1,200
	Special:	S ≤ 80
	S ≥ 0
	Regular:	R ≥ 0 
B)  	Maximize:	$128R + $720S
Constraints:
	Labor-hours:	20R + 34S ≥ 1,600
	Machine-hours:	8R + 20S ≥≤ 1,200
	Special:	S ≥ 80
	S ≥ 0
	Regular:	R ≥ 0 
C)  	Maximize:	$720S + $128R
Constraints:
	Labor-hours:	20R + 8S ≤ 1,600
	Machine-hours:	34R + 20S ≤ 1,200
	Special:	S ≤ 80
	S ≥ 0
	Regular:	R ≥ 0 
D)  	Maximize:	$128R + $720S
Constraints:
	Labor-hours:	20R + 34S ≤ 1,600
	Machine-hours:	8R + 20S ≤ 1,200
	Special:	S ≥ 80
	S ≤ 0
	Regular:	R ≤ 0

Question 4

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.
-If Louis Cifer wanted a long-term commitment for supplying this product, this analysis:

Accepted Answer

A) would definitely be different 
B) may be different 
C) would not be different 
D) does not contain enough information to determine if there would be a difference 
A) would definitely be different 
B) may be different 
C) would not be different 
D) does not contain enough information to determine if there would be a difference

Question 5

Which of the following costs are NEVER relevant in the decision-making process?

Accepted Answer

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

Question 6

Answer the following questions using the information below:
Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply:
  
-The contribution per machine-hour is:

Accepted Answer

A) $18 for Standard, $20 for Premium 
B) $54 for Standard, $80 for Premium 
C) $15 for Standard, $16 for Premium 
D) $6 for Standard, $5 for Premium 
A) $18 for Standard, $20 for Premium 
B) $54 for Standard, $80 for Premium 
C) $15 for Standard, $16 for Premium 
D) $6 for Standard, $5 for Premium

Question 7

How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.

Accepted Answer

Since managers will act in their self in

Question 8

With a constraining resource, managers should choose the product with the:

Accepted Answer

A) lowest contribution margin per unit of the constraining resource 
B) highest sales price 
C) highest contribution margin per unit of the constraining resource 
D) highest gross profit 
A) lowest contribution margin per unit of the constraining resource 
B) highest sales price 
C) highest contribution margin per unit of the constraining resource 
D) highest gross profit

Question 9

A recent college graduate has the choice of buying a new car for $40,000 or investing the money for four years with a 6% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is:

Accepted Answer

A) $2,400 
B) $9,600 
C) $40,000 
D) zero since there is no opportunity cost for this decision 
A) $2,400 
B) $9,600 
C) $40,000 
D) zero since there is no opportunity cost for this decision

Question 10

Relevant costs of a make-or-buy decision include all of the following EXCEPT:

Accepted Answer

A) fixed salaries that will not be incurred if the part is outsourced 
B) current direct material costs of the part 
C) special machinery for the part that has no resale value 
D) material-handling costs that can be eliminated 
A) fixed salaries that will not be incurred if the part is outsourced 
B) current direct material costs of the part 
C) special machinery for the part that has no resale value 
D) material-handling costs that can be eliminated

Question 11

Schmidt Sewing Company incorporates the services of Deb's Sewing. Schmidt purchases pre-cut dresses from Deb's. This is primarily known as:

Accepted Answer

A) insourcing 
B) outsourcing 
C) relevant costing 
D) sunk costing 
A) insourcing 
B) outsourcing 
C) relevant costing 
D) sunk costing

Question 12

Management should focus on per unit costs when deciding whether to discontinue a product or not.

Accepted Answer

A) True 
 B)False

Question 13

Answer the following questions using the information below:
Victoria, Inc., is considering replacing a machine. The following data are available:
  
-Which of the data provided in the table is a sunk cost?

Accepted Answer

A) the annual cash operating costs of the old machine 
B) the annual cash operating costs of the replacement machine 
C) the disposal value of the old machine 
D) the original cost of the old machine 
A) the annual cash operating costs of the old machine 
B) the annual cash operating costs of the replacement machine 
C) the disposal value of the old machine 
D) the original cost of the old machine

Question 14

In a one-time special order situation, if the price offered by the buyer is less than the absorption cost per unit, the special order may still be profitable since absorption costs include allocated fixed manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 15

Outsourcing is:

Accepted Answer

A) purchasing goods and services internally 
B) never a viable option 
C) more desirable than insourcing 
D) purchasing goods and services from outside vendors 
A) purchasing goods and services internally 
B) never a viable option 
C) more desirable than insourcing 
D) purchasing goods and services from outside vendors

Question 16

Answer the following questions using the information below:
Stephans Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:
   Bill Company has contacted Stephans with an offer to sell them 5,000 of the subassemblies for $22.00 each. Stephans will eliminate $25,000 of fixed overhead if it accepts the proposal.
-What are the relevant costs for Stephans?

Accepted Answer

A) $140,000 
B) $125,000 
C) $105,000 
D) $80,000 
A) $140,000 
B) $125,000 
C) $105,000 
D) $80,000

Question 17

If there was limited capacity, all of the following amounts would change EXCEPT:

Accepted Answer

A) opportunity costs 
B) differential costs 
C) variable costs 
D) the minimum acceptable price 
A) opportunity costs 
B) differential costs 
C) variable costs 
D) the minimum acceptable price

Question 18

For decision making, a listing of the relevant costs:

Accepted Answer

A) will help the decision maker concentrate on the pertinent data 
B) will only include future costs 
C) will only include costs that differ among alternatives 
D) All of these answers are correct. 
A) will help the decision maker concentrate on the pertinent data 
B) will only include future costs 
C) will only include costs that differ among alternatives 
D) All of these answers are correct.

Question 19

How can Lisa Braun encourage her salespeople to promote the more profitable model?

Accepted Answer

A) Put all sales persons on salary. 
B) Provide higher sales commissions for higher priced items. 
C) Provide higher sales commissions for items with the greatest contribution margin per constrained resource. 
D) Both B and C are correct. 
A) Put all sales persons on salary. 
B) Provide higher sales commissions for higher priced items. 
C) Provide higher sales commissions for items with the greatest contribution margin per constrained resource. 
D) Both B and C are correct.

Question 20

The sum of all the costs incurred in a particular business function (for example, marketing)is called the:

Accepted Answer

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

Factors used to decide whether to outsource a part include:

Doggie Dinner, Inc., currently manufactures three different types of scientifically balanced dog food. The firm is considering eliminating one of the three products. What factors should be taken into account in making this decision?

Which of the following costs are NEVER relevant in the decision-making process?

Answer the following questions using the information below: Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply: -The contribution per machine-hour is:

How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.

With a constraining resource, managers should choose the product with the:

A recent college graduate has the choice of buying a new car for $40,000 or investing the money for four years with a 6% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is:

Relevant costs of a make-or-buy decision include all of the following EXCEPT:

Schmidt Sewing Company incorporates the services of Deb's Sewing. Schmidt purchases pre-cut dresses from Deb's. This is primarily known as:

Management should focus on per unit costs when deciding whether to discontinue a product or not.

Answer the following questions using the information below: Victoria, Inc., is considering replacing a machine. The following data are available: -Which of the data provided in the table is a sunk cost?

In a one-time special order situation, if the price offered by the buyer is less than the absorption cost per unit, the special order may still be profitable since absorption costs include allocated fixed manufacturing overhead.

Outsourcing is:

If there was limited capacity, all of the following amounts would change EXCEPT:

For decision making, a listing of the relevant costs:

How can Lisa Braun encourage her salespeople to promote the more profitable model?

The sum of all the costs incurred in a particular business function (for example, marketing)is called the:

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

Factors used to decide whether to outsource a part include:

Doggie Dinner, Inc., currently manufactures three different types of scientifically balanced dog food. The firm is considering eliminating one of the three products. What factors should be taken into account in making this decision?

Which of the following costs are NEVER relevant in the decision-making process?

Answer the following questions using the information below: Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply: -The contribution per machine-hour is:

How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.

With a constraining resource, managers should choose the product with the:

A recent college graduate has the choice of buying a new car for $40,000 or investing the money for four years with a 6% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is:

Relevant costs of a make-or-buy decision include all of the following EXCEPT:

Schmidt Sewing Company incorporates the services of Deb's Sewing. Schmidt purchases pre-cut dresses from Deb's. This is primarily known as:

Management should focus on per unit costs when deciding whether to discontinue a product or not.

Answer the following questions using the information below: Victoria, Inc., is considering replacing a machine. The following data are available: -Which of the data provided in the table is a sunk cost?

In a one-time special order situation, if the price offered by the buyer is less than the absorption cost per unit, the special order may still be profitable since absorption costs include allocated fixed manufacturing overhead.

Outsourcing is:

If there was limited capacity, all of the following amounts would change EXCEPT:

For decision making, a listing of the relevant costs:

How can Lisa Braun encourage her salespeople to promote the more profitable model?

The sum of all the costs incurred in a particular business function (for example, marketing)is called the:

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