Question 1

The financial measures used to evaluate a manager's performance should be consistent with the decision model.

Accepted Answer

A) True 
 B)False

Question 2

Answer the following question(s)using the information below.
Quick Shop Printing has two workstations,cutting and pasting.The cutting station is limited by the speed of operating the cutting machine.Pasting is limited by the speed of the workers.Pasting normally waits on work from cutting.Each department works an eight-hour day.If cutting begins work two hours earlier than pasting each day,the two departments generally finish their work at about the same time.Not only does this eliminate the bottleneck,but it increases finished units produced each day by 80 units.All units produced can be sold.The cost of operating the cutting department two more hours each day is $800.The contribution margin of the finished products is $3 each.Inventory carrying costs are $0.20 per unit per day.
-What is the change in the daily contribution margin if the change is made?

Accepted Answer

A) $1,200 
B) $(128) 
C) $(560) 
D) $240 
E) $(568) 
A) $1,200 
B) $(128) 
C) $(560) 
D) $240 
E) $(568)

Question 3

Answer the following question(s)using the information below.
Braun'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:
  
-The greatest possible contribution margin per unit of the constraining factor will ensure which of the following?

Accepted Answer

A) minimum total variable costs 
B) zero imputed costs 
C) minimum fixed cost per unit of production 
D) minimum variable costs per unit of production 
E) maximum operating income 
A) minimum total variable costs 
B) zero imputed costs 
C) minimum fixed cost per unit of production 
D) minimum variable costs per unit of production 
E) maximum operating income

Question 4

Use the information below to answer the following question(s).
Northwoods manufactures rustic furniture.The cost accounting system estimates manufacturing costs to be $90 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% markup 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?

Accepted Answer

A) $6,300 
B) $7,200 
C) $10,800 
D) $13,500 
E) $9,000 
A) $6,300 
B) $7,200 
C) $10,800 
D) $13,500 
E) $9,000

Question 5

Unit cost data can mislead decisions by including irrelevant costs or by

Accepted Answer

A) not computing fixed overhead costs. 
B) computing labour and materials costs only. 
C) computing administrative costs. 
D) not computing unit costs at the relevant output level. 
E) including qualitative data. 
A) not computing fixed overhead costs. 
B) computing labour and materials costs only. 
C) computing administrative costs. 
D) not computing unit costs at the relevant output level. 
E) including qualitative data.

Question 6

First Image has a plant capacity of 80,000 units per month.Unit costs at capacity are:
 
Current monthly sales are 78,000 units at $12.60 each.Computer Output Management has contacted First Image about purchasing 2,000 units at $12.00 each.Current sales would not be affected by the special order.What is First Image's change in profits if the order is accepted?

Accepted Answer

A) $7,400 increase 
B) $8,600 increase 
C) $4,400 increase 
D) $2,600 decrease 
E) $3,600 decrease 
A) $7,400 increase 
B) $8,600 increase 
C) $4,400 increase 
D) $2,600 decrease 
E) $3,600 decrease

Question 7

Describes the steps involved in solving a linear programming problem.

Accepted Answer

Step 1: Determine the objectiv

Question 8

Palmateer Industries makes an electronic component in two departments,Machining and Assembly.The capacity per month is 30,000 units in the Machining Department and 20,000 in the Assembly Department.The only variable cost of the product is the direct material of $100 per unit.All direct material cost is incurred in the Machining Department.All other costs of operating the two departments are fixed costs.Palmateer can sell as many units of this electronic component as it produces at a selling price of $300 per unit.
Required:
Assuming any defective unites produced in either department must be scrapped:
a.Compute the loss that occurs if a defective unit is produced in the Machining Department.
b.Compute the loss that occurs if a defective unit is produced in the Assembly Department.
c.How do your answers in parts (a)and (b)relate to the theory of constraints? Explain.

Accepted Answer

a.
 @#IMG-DLM& 
b.
 @#IMG-DLM& 
c.
Under the theory of const

Question 9

A student is considering whether to finish their university program in four consecutive years,or take a year off and work for some extra cash.
Required:
a.Identify at least two revenues or costs that are relevant to making this decision.Explain why each is relevant.
b.Identify at least two costs that would be considered sunk costs for this decision.
c.Comment on at least one qualitative consideration for this decision.

Accepted Answer

The answer of A student is considering whether to finish...

Question 10

Answer the following question(s)using the information below.
Quick Shop Printing has two workstations,cutting and pasting.The cutting station is limited by the speed of operating the cutting machine.Pasting is limited by the speed of the workers.Pasting normally waits on work from cutting.Each department works an eight-hour day.If cutting begins work two hours earlier than pasting each day,the two departments generally finish their work at about the same time.Not only does this eliminate the bottleneck,but it increases finished units produced each day by 80 units.All units produced can be sold.The cost of operating the cutting department two more hours each day is $800.The contribution margin of the finished products is $3 each.Inventory carrying costs are $0.20 per unit per day.
-What is the daily capacity of the pasting workstation based on a ten hour day?

Accepted Answer

A) 320 
B) 400 
C) 440 
D) 800 
E) 820 
A) 320 
B) 400 
C) 440 
D) 800 
E) 820

Question 11

Which of the following statements related to the theory of constraints is/are TRUE?

Accepted Answer

A) Sales less direct materials costs equals throughput contribution. 
B) Throughput contribution equals sales plus direct materials,and the theory of constraints focuses on revenue and cost management when an organization is faced with bottlenecks. 
C) Throughput contribution equals sales plus direct materials. 
D) The theory of constraints focuses on process-costing when an organization is faced with bottlenecks. 
E) Throughput contribution equals sales plus direct manufacturing costs. 
A) Sales less direct materials costs equals throughput contribution. 
B) Throughput contribution equals sales plus direct materials,and the theory of constraints focuses on revenue and cost management when an organization is faced with bottlenecks. 
C) Throughput contribution equals sales plus direct materials. 
D) The theory of constraints focuses on process-costing when an organization is faced with bottlenecks. 
E) Throughput contribution equals sales plus direct manufacturing costs.

Question 12

If Harry Inc.doesn't use one of its limited resources in the best possible way,the lost contribution to income could be called

Accepted Answer

A) an alternative cost. 
B) a total alternative cost. 
C) an opportunity cost. 
D) a resource cost. 
E) a constraining factor. 
A) an alternative cost. 
B) a total alternative cost. 
C) an opportunity cost. 
D) a resource cost. 
E) a constraining factor.

Question 13

For make-or-buy decisions,relevant costs include

Accepted Answer

A) direct material costs plus direct labour costs. 
B) incremental costs plus opportunity costs. 
C) differential costs plus sunk costs. 
D) incremental costs plus fixed costs. 
E) variable costs plus fixed overhead. 
A) direct material costs plus direct labour costs. 
B) incremental costs plus opportunity costs. 
C) differential costs plus sunk costs. 
D) incremental costs plus fixed costs. 
E) variable costs plus fixed overhead.

Question 14

Answer the following question(s)using the information below.
Konrade'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.Konrade's Engine Company has the option of purchasing the part from an outside supplier at $85 per unit.
-If Konrade's Engine Company accepts the offer from the outside supplier,the monthly avoidable costs (costs that will no longer be incurred)total

Accepted Answer

A) $80,000 
B) $98,000 
C) $50,000 
D) $100,000. 
E) $82,000 
A) $80,000 
B) $98,000 
C) $50,000 
D) $100,000. 
E) $82,000

Question 15

A company would subordinate all bottleneck production to non-bottleneck machines when

Accepted Answer

A) the bottleneck resource was temporarily unused. 
B) setup time on the non-bottleneck machine is higher than on the bottleneck machine. 
C) setup time on the non-bottleneck machine is less than on the bottleneck machine. 
D) it intends to increase throughput contribution. 
E) it wants to produce at least a minimum buffer inventory. 
A) the bottleneck resource was temporarily unused. 
B) setup time on the non-bottleneck machine is higher than on the bottleneck machine. 
C) setup time on the non-bottleneck machine is less than on the bottleneck machine. 
D) it intends to increase throughput contribution. 
E) it wants to produce at least a minimum buffer inventory.

Question 16

Divisional revenues which remain at the same level from year to year are known as relevant revenues.

Accepted Answer

A) True 
 B)False

Question 17

In linear programming,the goals of management are expressed in

Accepted Answer

A) an objective function. 
B) constraints. 
C) operating policies. 
D) business functions. 
E) a mathematical inequality or equality. 
A) an objective function. 
B) constraints. 
C) operating policies. 
D) business functions. 
E) a mathematical inequality or equality.

Question 18

Answer the following question(s)using the information below.
Quick Shop Printing has two workstations,cutting and pasting.The cutting station is limited by the speed of operating the cutting machine.Pasting is limited by the speed of the workers.Pasting normally waits on work from cutting.Each department works an eight-hour day.If cutting begins work two hours earlier than pasting each day,the two departments generally finish their work at about the same time.Not only does this eliminate the bottleneck,but it increases finished units produced each day by 80 units.All units produced can be sold.The cost of operating the cutting department two more hours each day is $800.The contribution margin of the finished products is $3 each.Inventory carrying costs are $0.20 per unit per day.
-Which of the following is NOT a key step in managing bottleneck resources?

Accepted Answer

A) Recognize that the bottleneck resource determines throughput contribution of the plant as a whole. 
B) Search and find the bottleneck resource by identifying resources with large quantities of inventory waiting to be worked on. 
C) Keep the bottleneck operation busy and subordinate all nonbottleneck resources to the bottleneck resource. 
D) Reduce the number of employees who work in the bottleneck area. 
E) Take action to increase bottleneck efficiency and capacity. 
A) Recognize that the bottleneck resource determines throughput contribution of the plant as a whole. 
B) Search and find the bottleneck resource by identifying resources with large quantities of inventory waiting to be worked on. 
C) Keep the bottleneck operation busy and subordinate all nonbottleneck resources to the bottleneck resource. 
D) Reduce the number of employees who work in the bottleneck area. 
E) Take action to increase bottleneck efficiency and capacity.

Question 19

The last step in the decision process is normally to

Accepted Answer

A) evaluate and explain outcomes. 
B) make assumptions and predictions. 
C) choose alternatives. 
D) perform quantitative analysis. 
E) gather information. 
A) evaluate and explain outcomes. 
B) make assumptions and predictions. 
C) choose alternatives. 
D) perform quantitative analysis. 
E) gather information.

Question 20

A florist produces table settings for weddings.Based on an annual volume of 10,000 units it incurs $100,000 in fixed manufacturing costs.Variable costs per unit are $16 for direct materials,$3 for direct manufacturing labour,and $14 for variable factory overhead.
Another company has offered to supply empty baskets for the settings for $8,with a minimum annual order of 5,000 units.If the florist accepts the offer,it will be able to reduce variable labour and overhead costs by 50 percent.The materials for the empty baskets will cost $4 if the florist assembles them.
Required:
a.Determine if they should make or assemble the empty baskets.
b.Should they make or assemble the empty baskets if they could rent the space that the basket assembly requires for $16,000 per year to another company?

Accepted Answer

@#IMG-DLM& Differenc

The financial measures used to evaluate a manager's performance should be consistent with the decision model.

Unit cost data can mislead decisions by including irrelevant costs or by

Describes the steps involved in solving a linear programming problem.

Which of the following statements related to the theory of constraints is/are TRUE?

If Harry Inc.doesn't use one of its limited resources in the best possible way,the lost contribution to income could be called

For make-or-buy decisions,relevant costs include

A company would subordinate all bottleneck production to non-bottleneck machines when

Divisional revenues which remain at the same level from year to year are known as relevant revenues.

In linear programming,the goals of management are expressed in

The last step in the decision process is normally to

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 11: Decision Making and Relevant Information

The financial measures used to evaluate a manager's performance should be consistent with the decision model.

Unit cost data can mislead decisions by including irrelevant costs or by

Describes the steps involved in solving a linear programming problem.

Which of the following statements related to the theory of constraints is/are TRUE?

If Harry Inc.doesn't use one of its limited resources in the best possible way,the lost contribution to income could be called

For make-or-buy decisions,relevant costs include

A company would subordinate all bottleneck production to non-bottleneck machines when

Divisional revenues which remain at the same level from year to year are known as relevant revenues.

In linear programming,the goals of management are expressed in

The last step in the decision process is normally to

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters