Question 1

For determining the best mix of products,the one with the LEAST amount of influence is:

Accepted Answer

A) the use of capacity resources. 
B) corporate office costs allocated to each product. 
C) the market price of the products. 
D) contribution margins. 
A) the use of capacity resources. 
B) corporate office costs allocated to each product. 
C) the market price of the products. 
D) contribution margins.

Question 2

Answer the following questions using the information below:
White's Brakes manufactures three different product lines,Model X,Model Y and Model Z.Considerable market demand exists for all models.The following per unit data apply:
 $$\begin{array} { l r r r r } 
& \text { Model X } & \text { Model Y } & \text { Model Z } \
 \text { Selling price } & \$ 50 &  \$ 60 & \$ 70 \
\text { Direct materials } & 6 & 6 & 6 \
\text { Direct labour ( } \$ 12 \text { per hour) } & 12  & 12 & 24 \
\text { Variable support costs } ( \$ 4 \text { per machine-hour) } & 4 & 8 & 8 \
\text { Fixed support costs } & 10 & 10 & 10
\end{array}$$
-Which model has the greatest contribution margin per machine-hour?

Accepted Answer

A) Model X 
B) Model Y 
C) Model Z 
D) Models Y and Z 
A) Model X 
B) Model Y 
C) Model Z 
D) Models Y and Z

Question 3

Relevant information has all of these characteristics EXCEPT:

Accepted Answer

A) all future revenues and expenses are relevant. 
B) past costs are irrelevant. 
C) different alternatives can be compared by examining differences in total revenue and expenses. 
D) qualitative factors should be considered. 
A) all future revenues and expenses are relevant. 
B) past costs are irrelevant. 
C) different alternatives can be compared by examining differences in total revenue and expenses. 
D) qualitative factors should be considered.

Question 4

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

Accepted Answer

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

Question 5

Problems that should be avoided when identifying relevant costs include all of the following EXCEPT:

Accepted Answer

A) assuming all fixed costs are irrelevant. 
B) using total costs that separate variable and fixed components. 
C) assuming all variable costs are relevant. 
D) using unit costs that do not separate variable and fixed components. 
A) assuming all fixed costs are irrelevant. 
B) using total costs that separate variable and fixed components. 
C) assuming all variable costs are relevant. 
D) using unit costs that do not separate variable and fixed components.

Question 6

Recognising that the bottleneck operation determines throughput contribution of the entire system is the first step in managing bottleneck operations.

Accepted Answer

A) True 
 B)False

Question 7

Answer the following questions using the information below:
Darwin's Rockers manufactures two models,Deluxe and Super Deluxe.Weekly demand is estimated to be 100 units of the Deluxe Model and 70 units of the Super Deluxe Model.The following per unit data apply:
 $$\begin{array} { l c c } 
& \text { Deluxe } & \text { Sumer Deluxe } \
\text { Contribution margin per unit } & \$ 18 & \$ 20 \
\text { Number of machine-hours required } & 3 & 4
\end{array}$$
-If there are 496 machine-hours available per week,how many rockers of each model should Jim Darwin produce to maximise profits?

Accepted Answer

A) 100 units of Deluxe and 49 units of Super Deluxe 
B) 100 units of Deluxe and 70 units of Super Deluxe 
C) 85 units of Deluxe and 60 units of Super Deluxe 
D) 72 units of Deluxe and 70 units of Super Deluxe 
A) 100 units of Deluxe and 49 units of Super Deluxe 
B) 100 units of Deluxe and 70 units of Super Deluxe 
C) 85 units of Deluxe and 60 units of Super Deluxe 
D) 72 units of Deluxe and 70 units of Super Deluxe

Question 8

For machine-replacement decisions,depreciation is a cost that is:

Accepted Answer

A) incremental. 
B) not relevant. 
C) differential. 
D) variable. 
A) incremental. 
B) not relevant. 
C) differential. 
D) variable.

Question 9

Linear programming is a tool that maximises total contribution margin of a mix of products with multiple constraints.

Accepted Answer

A) True 
 B)False

Question 10

'Outsourcing' is purchasing goods and services from outside vendors rather than insourcing,which is producing the same goods or providing the same services within the organisation.

Accepted Answer

A) True 
 B)False

Question 11

Constraints may include:

Accepted Answer

A) linear square metres of display space for a retailer. 
B) the availability of direct materials in manufacturing. 
C) direct labour in the service industry. 
D) All of these answers are correct. 
A) linear square metres of display space for a retailer. 
B) the availability of direct materials in manufacturing. 
C) direct labour in the service industry. 
D) All of these answers are correct.

Question 12

Answer the following questions using the information below:
Casper's Engine Company manufactures part TE456 used in several of its engine models.Monthly production costs for 1000 units are as follows:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 40000 \
\text { Direct labour } & 10000 \
\text { Variable overhead costs } & 30000 \
\text { Fixed overhead costs } & \underline{ 20000 }\
\quad \text { Total costs } & \underline{ \$ 100000} \
\end{array}$$ 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.Casper's Engine Company has the option of purchasing the part from an outside supplier at $85 per unit.
-If Casper's Engine Company purchases 1000 TE456 parts from the outside supplier per month,then its monthly operating profit will:

Accepted Answer

A) increase by $80 000. 
B) decrease by $85 000. 
C) decrease by $3000. 
D) increase by $2000. 
A) increase by $80 000. 
B) decrease by $85 000. 
C) decrease by $3000. 
D) increase by $2000.

Question 13

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

Accepted Answer

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

Question 14

Which of following are risks of outsourcing the production of a part?

Accepted Answer

A) Unreliable delivery 
B) Unscheduled price increases 
C) Unpredictable quality 
D) All of these answers are correct. 
A) Unreliable delivery 
B) Unscheduled price increases 
C) Unpredictable quality 
D) All of these answers are correct.

Question 15

Answer the following questions using the information below:
White's Brakes manufactures three different product lines,Model X,Model Y and Model Z.Considerable market demand exists for all models.The following per unit data apply:
 $$\begin{array} { l r r r r } 
& \text { Model X } & \text { Model Y } & \text { Model Z } \
 \text { Selling price } & \$ 50 &  \$ 60 & \$ 70 \
\text { Direct materials } & 6 & 6 & 6 \
\text { Direct labour ( } \$ 12 \text { per hour) } & 12  & 12 & 24 \
\text { Variable support costs } ( \$ 4 \text { per machine-hour) } & 4 & 8 & 8 \
\text { Fixed support costs } & 10 & 10 & 10
\end{array}$$
-Which model has the greatest contribution margin per unit?

Accepted Answer

A) Model X 
B) Model Y 
C) Model Z 
D) Models X and Y 
A) Model X 
B) Model Y 
C) Model Z 
D) Models X and Y

Question 16

The ________ amount-original cost minus accumulated depreciation-of existing equipment is a past cost that is irrelevant.

Accepted Answer

A) opportunity 
B) sunk 
C) carrying 
D) financial 
A) opportunity 
B) sunk 
C) carrying 
D) financial

Question 17

Lewis Auto Company manufactures a part for use in its production of motor cars.When 10 000 items are produced,the costs per unit are:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 12 \
\text { Direct manufacturing labour } & 60 \
\text { Variable manufacturing overhead } & 24 \
\text { Fixed manufacturing overhead } & \underline { 32 } \
\quad \text { Total } & \underline { \$ 128} \
\end{array}$$ 
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

a.
  The b

Question 18

One type of decision that affects output levels is accepting or rejecting special orders when there is idle production capacity and the special orders have no long-run implications.

Accepted Answer

A) True 
 B)False

Question 19

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.
-If Ms Wang wanted a long-term commitment for supplying this product,this analysis:

Accepted Answer

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

Question 20

For short-term pricing decisions,what costs are relevant when there is available surplus capacity? When there is no available surplus capacity?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

For both situations the relevant costs a

For determining the best mix of products,the one with the LEAST amount of influence is:

Relevant information has all of these characteristics EXCEPT:

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

Problems that should be avoided when identifying relevant costs include all of the following EXCEPT:

Recognising that the bottleneck operation determines throughput contribution of the entire system is the first step in managing bottleneck operations.

For machine-replacement decisions,depreciation is a cost that is:

Linear programming is a tool that maximises total contribution margin of a mix of products with multiple constraints.

'Outsourcing' is purchasing goods and services from outside vendors rather than insourcing,which is producing the same goods or providing the same services within the organisation.

Constraints may include:

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

Which of following are risks of outsourcing the production of a part?

The ________ amount-original cost minus accumulated depreciation-of existing equipment is a past cost that is irrelevant.

One type of decision that affects output levels is accepting or rejecting special orders when there is idle production capacity and the special orders have no long-run implications.

For short-term pricing decisions,what costs are relevant when there is available surplus capacity? When there is no available surplus capacity? _ _

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

For determining the best mix of products,the one with the LEAST amount of influence is:

Relevant information has all of these characteristics EXCEPT:

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

Problems that should be avoided when identifying relevant costs include all of the following EXCEPT:

Recognising that the bottleneck operation determines throughput contribution of the entire system is the first step in managing bottleneck operations.

For machine-replacement decisions,depreciation is a cost that is:

Linear programming is a tool that maximises total contribution margin of a mix of products with multiple constraints.

'Outsourcing' is purchasing goods and services from outside vendors rather than insourcing,which is producing the same goods or providing the same services within the organisation.

Constraints may include:

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

Which of following are risks of outsourcing the production of a part?

The ________ amount-original cost minus accumulated depreciation-of existing equipment is a past cost that is irrelevant.

One type of decision that affects output levels is accepting or rejecting special orders when there is idle production capacity and the special orders have no long-run implications.

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