Answer the following questions using the information below: Grant's Cakes is approached by Ms Tammy Wang,a new customer,to fulfil 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: \[\begin{array} { l r } \text { Direct materials } & \$ 455 \\ \text { Direct labour } & 300 \\ \text { Variable manufacturing support } & 45 \\ \text { Fixed manufacturing support } & 100 \\ \text { Total manufacturing costs } & 900 \\ \text { Mark-up (60\%) } & \underline { 540 } \\ \text { Targeted selling price } & \$ 1440 \end{array}\] Grant's Kitchens has excess capacity.Ms Wang wants layered cream cheese pound cakes rather than plain pound cakes,so direct material costs will increase by $30 per unit. -Other than price,what other items should Grant's Cakes consider before accepting this one-time-only special order?

A) Price is the only consideration B) Demand for cherry cabinets C) Reaction of shareholders D) Reaction of existing customers to the lower price offered to Ms Wang A) Price is the only consideration B) Demand for cherry cabinets C) Reaction of shareholders D) Reaction of existing customers to the lower price offered to Ms Wang

Answer the following questions using the information below: Jamberry Preserves currently makes jams and spreads 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: \[\begin{array} { l r } \text { Direct materials } & \$ 0.25 \\ \text { Direct labour } & 0.03 \\ \text { Unit-related support costs } & 0.10 \\ \text { Batch-related support costs } & 0.12 \\ \text { Product-sustaining support costs } & 0.22 \\ \text { Facility-sustaining support costs } & 0.28 \\ { \text { Total cost per jar } } & \underline{ \$ 1.00} \end{array}\] -The maximum price that Jamberry Preserves should be willing to pay for the decorative jars is:

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

A segment has the following data: \[\begin{array} { l r } \text { Sales } & \$ 600000 \\ \text { Variable costs } & 320000 \\ \text { Fixed costs } & 310000 \end{array}\] What will be the incremental effect on net income if this segment is eliminated,assuming the fixed costs will be allocated to profitable segments?

A) $290 000 decrease B) $30 000 increase C) $280 000 decrease D) $310 000 decrease A) $290 000 decrease B) $30 000 increase C) $280 000 decrease D) $310 000 decrease

Answer the following questions using the information below: Welch Manufacturing is approached by a European customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers.Welch Manufacturing has excess capacity.The following per unit data apply for sales to regular customers: \[\begin{array} { l r } \text { Variable costs: } & \\ \quad \text { Direct materials } & \$ 40 \\ \quad \text { Direct labour } & 20 \\ \text { Manufacturing support } & 35 \\ \quad \text { Marketing costs } & 15 \\ \text { Fixed costs: } & \\ \quad \text { Manufacturing support } & 45 \\ \quad \text { Marketing costs } & 15 \\ \text { Total costs } & 170 \\ \text { Mark-up (50\%) } & \underline { 85 } \\ \text { Targeted selling price } & \$ 255 \end{array}\] -What is the change in operating profits if the one-time-only special order for 1000 units is accepted for $180 a unit by Welch?

A) $70 000 increase in operating profits B) $75 000 decrease in operating profits C) $10 000 decrease in operating profits D) $10 000 increase in operating profits A) $70 000 increase in operating profits B) $75 000 decrease in operating profits C) $10 000 decrease in operating profits D) $10 000 increase in operating profits

Exam 10: Decision Making and Relevant Information

Answer the following questions using the information below: Grant's Cakes is approached by Ms Tammy Wang,a new customer,to fulfil 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: Direct materials \ 455 Direct labour 300 Variable manufacturing support 45 Fixed manufacturing support 100 Total manufacturing costs 900 Mark-up (60\%) Targeted selling price \ 1440 Grant's Kitchens has excess capacity.Ms Wang wants layered cream cheese pound cakes rather than plain pound cakes,so direct material costs will increase by $30 per unit. -Other than price,what other items should Grant's Cakes consider before accepting this one-time-only special order?

(Multiple Choice)

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Question 41

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:

(Multiple Choice)

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Question 42

Which of the following would NOT be considered in a make-or-buy decision?

(Multiple Choice)

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Question 43

Absorption cost per unit is the best product cost to use for one-time-only special order decisions.

(True/False)

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Question 44

In linear programming,what are the goals of management expressed in?

(Multiple Choice)

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Question 45

________ is/are relevant in a decision to replace equipment.

(Multiple Choice)

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Question 46

Top management faces a persistent challenge to make sure that the performance evaluation model of lower level managers is:

(Multiple Choice)

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Question 47

Answer the following questions using the information below: Jamberry Preserves currently makes jams and spreads 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: Direct materials \ 0.25 Direct labour 0.03 Unit-related support costs 0.10 Batch-related support costs 0.12 Product-sustaining support costs 0.22 Facility-sustaining support costs 0.28 Total cost per jar -The maximum price that Jamberry Preserves should be willing to pay for the decorative jars is:

(Multiple Choice)

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Question 48

The cost to produce Part A was $10 per unit in 2017 and in 2018 it has increased to $11 per unit.In 2018,Supplier XYZ has offered to supply Part A for $9 per unit.For the make-or-buy decision:

(Multiple Choice)

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Question 49

Regardless of the restraining resource,managers should produce more of the product with the greatest contribution margin per unit to maximise profits.

(True/False)

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Question 50

A bottleneck occurs in an operation when the work to be performed exceeds the available capacity to do it.

(True/False)

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Question 51

A segment has the following data: Sales \ 600000 Variable costs 320000 Fixed costs 310000 What will be the incremental effect on net income if this segment is eliminated,assuming the fixed costs will be allocated to profitable segments?

(Multiple Choice)

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Question 52

Generally,managers use total costs rather than unit costs because total costs are easier to work with and reduce the chance for erroneous conclusions.

(True/False)

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Question 53

The assumption of no ________ or strategic implications is crucial to management's analysis of the one-time-only special order decision.

(Multiple Choice)

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Question 54

An incremental product cost is generally a fixed cost.

(True/False)

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Question 55

Explain why sunk costs are not considered relevant when choosing among alternatives. _ _

(Essay)

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Question 56

When deciding to accept a one-time-only special order from a wholesaler,management should do all of the following EXCEPT:

(Multiple Choice)

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Question 57

Because TOC regards operating costs as difficult to change in the short run,it does not identify individual activities and cost drivers.

(True/False)

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Question 58

Answer the following questions using the information below: Northwoods manufactures rustic furniture.The cost accounting system estimates manufacturing costs to be $100 per table,consisting of 80% variable costs and 20% fixed costs.The company has surplus capacity available.It is Northwoods' policy to add a 50% mark-up to full costs. -Northwoods is invited to bid on a one-time-only special order to supply 100 rustic tables.What is the lowest price Northwoods should bid on this special order?

(Multiple Choice)

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Question 59

Answer the following questions using the information below: Welch Manufacturing is approached by a European customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers.Welch Manufacturing has excess capacity.The following per unit data apply for sales to regular customers: Variable costs: Direct materials \ 40 Direct labour 20 Manufacturing support 35 Marketing costs 15 Fixed costs: Manufacturing support 45 Marketing costs 15 Total costs 170 Mark-up (50\%) Targeted selling price \ 255 -What is the change in operating profits if the one-time-only special order for 1000 units is accepted for $180 a unit by Welch?

(Multiple Choice)

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(38)

Question 60

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:

Which of the following would NOT be considered in a make-or-buy decision?

Absorption cost per unit is the best product cost to use for one-time-only special order decisions.

In linear programming,what are the goals of management expressed in?

________ is/are relevant in a decision to replace equipment.

Top management faces a persistent challenge to make sure that the performance evaluation model of lower level managers is:

The cost to produce Part A was $10 per unit in 2017 and in 2018 it has increased to $11 per unit.In 2018,Supplier XYZ has offered to supply Part A for $9 per unit.For the make-or-buy decision:

Regardless of the restraining resource,managers should produce more of the product with the greatest contribution margin per unit to maximise profits.

A bottleneck occurs in an operation when the work to be performed exceeds the available capacity to do it.

A segment has the following data: Sales \ 600000 Variable costs 320000 Fixed costs 310000 What will be the incremental effect on net income if this segment is eliminated,assuming the fixed costs will be allocated to profitable segments?

Generally,managers use total costs rather than unit costs because total costs are easier to work with and reduce the chance for erroneous conclusions.

The assumption of no ________ or strategic implications is crucial to management's analysis of the one-time-only special order decision.

An incremental product cost is generally a fixed cost.

Explain why sunk costs are not considered relevant when choosing among alternatives. _ _

When deciding to accept a one-time-only special order from a wholesaler,management should do all of the following EXCEPT:

Because TOC regards operating costs as difficult to change in the short run,it does not identify individual activities and cost drivers.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters

Exam 10: Decision Making and Relevant Information

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:

Which of the following would NOT be considered in a make-or-buy decision?

Absorption cost per unit is the best product cost to use for one-time-only special order decisions.

In linear programming,what are the goals of management expressed in?

________ is/are relevant in a decision to replace equipment.

Top management faces a persistent challenge to make sure that the performance evaluation model of lower level managers is:

The cost to produce Part A was $10 per unit in 2017 and in 2018 it has increased to $11 per unit.In 2018,Supplier XYZ has offered to supply Part A for $9 per unit.For the make-or-buy decision:

Regardless of the restraining resource,managers should produce more of the product with the greatest contribution margin per unit to maximise profits.

A bottleneck occurs in an operation when the work to be performed exceeds the available capacity to do it.

A segment has the following data: Sales \ 600000 Variable costs 320000 Fixed costs 310000 What will be the incremental effect on net income if this segment is eliminated,assuming the fixed costs will be allocated to profitable segments?

Generally,managers use total costs rather than unit costs because total costs are easier to work with and reduce the chance for erroneous conclusions.

The assumption of no ________ or strategic implications is crucial to management's analysis of the one-time-only special order decision.

An incremental product cost is generally a fixed cost.

Explain why sunk costs are not considered relevant when choosing among alternatives. _____________________________________________________________________________________________ _____________________________________________________________________________________________

When deciding to accept a one-time-only special order from a wholesaler,management should do all of the following EXCEPT:

Because TOC regards operating costs as difficult to change in the short run,it does not identify individual activities and cost drivers.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters

Explain why sunk costs are not considered relevant when choosing among alternatives. _ _