Question 1

Past costs that are unavoidable and unchangeable are known as

Accepted Answer

A) fixed overhead costs. 
B) operating costs. 
C) product production costs. 
D) sunk costs. 
E) constraining costs. 
A) fixed overhead costs. 
B) operating costs. 
C) product production costs. 
D) sunk costs. 
E) constraining costs.

Question 2

Answer the following question(s)using the information below.
Welch 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.Welch 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) $110 
B) $170 
C) $255 
D) $95 
E) $140 
A) $110 
B) $170 
C) $255 
D) $95 
E) $140

Question 3

Which of the following anticipated future costs always differ among alternative courses of actions?

Accepted Answer

A) direct labour costs 
B) historical costs 
C) relevant costs 
D) direct materials costs 
E) indirect costs 
A) direct labour costs 
B) historical costs 
C) relevant costs 
D) direct materials costs 
E) indirect costs

Question 4

Answer the following question(s)using the information below.
Schmidt 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,$30,000 is avoidable.
-Assuming no other use of their facilities,the highest price that Schmidt should be willing to pay for 10,000 units of the part is

Accepted Answer

A) $210,000. 
B) $170,000. 
C) $110,000. 
D) $180,000. 
E) $140,000. 
A) $210,000. 
B) $170,000. 
C) $110,000. 
D) $180,000. 
E) $140,000.

Question 5

Sarasota Bicycles has been manufacturing its own wheels for its bikes.The company is currently operating at 100% capacity,and variable manufacturing overhead is charged to production at the rate of 30% of direct labour cost.The direct materials and direct labour cost per unit to make the wheels are $3.00 and $3.60 respectively.Normal production is 200,000 wheels per year.
A supplier offers to make the wheels at a price of $8 each.If the bicycle company accepts this offer,all variable manufacturing costs will be eliminated,but the $84,000 of fixed manufacturing overhead currently being charged to the wheels will have to be absorbed by other products.
Required:
a.Prepare an incremental analysis for the decision to make or buy the wheels.
b.Should Sarasota Bicycles buy the wheels from the outside supplier? Justify your answer.

Accepted Answer

a.
 @#IMG-DLM& b.The wheels should conti

Question 6

When managers are faced with constraints the product line with the higher contribution margin per unit is always the best choice to make.

Accepted Answer

A) True 
 B)False

Question 7

The total cost difference between two separate alternatives in a decision making process is the net relevant cost.

Accepted Answer

A) True 
 B)False

Question 8

Car Parts Company manufactures a part for use in its production of automobiles.The costs per unit when 10,000 items are produced are:
   
Auto Company has offered to sell to Car Parts Company 10,000 units of the part for $60.The plant facilities could be used to manufacture another part at a savings of $90,000 if Car Parts accepts the offer.In addition,$10 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 Car Parts Company? By how much?

Accepted Answer

The answer of Car Parts Company manufactures a part for...

Question 9

Bid prices and costs that are relevant for regular orders are the same costs that are relevant for one-time-only special orders.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is TRUE concerning opportunity costs?

Accepted Answer

A) They are incorporated into formal financial accounting reports. 
B) They entail cash receipts. 
C) They entail cash disbursements. 
D) They require accounting journal entries. 
E) They are relevant for the make/buy decision. 
A) They are incorporated into formal financial accounting reports. 
B) They entail cash receipts. 
C) They entail cash disbursements. 
D) They require accounting journal entries. 
E) They are relevant for the make/buy decision.

Question 11

Ted owns a small body shop.His major costs include labour,parts,and rent.In the decision making process,these costs are always considered to be

Accepted Answer

A) fixed. 
B) qualitative factors. 
C) quantitative factors. 
D) variable. 
E) relevant costs. 
A) fixed. 
B) qualitative factors. 
C) quantitative factors. 
D) variable. 
E) relevant costs.

Question 12

When opportunity costs exist,they are always relevant.

Accepted Answer

A) True 
 B)False

Question 13

A customer can be considered to be a cost object,in the decision to add or drop a particular customer.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Lewis Auto Company manufactures a part for use in its production of automobiles.When 10,000 items are produced,the costs per unit are:
   
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

@#IMG-DLM& The best

Question 16

Anticipated future costs that differ with alternative courses of action are known as relevant costs.

Accepted Answer

A) True 
 B)False

Question 17

Kando Manufacturing Ltd.produces two products,lawn mowers and power washers.Lawn mowers have a unit contribution margin of $75,and power washers have a unit contribution margin of $55.The demand for lawn mowers exceeds their production capacity,which is limited by available direct labour and machine hours.The maximum demand for power washers is 300 per week.Management desires that the product mix should maximize the weekly contribution toward fixed costs and profits.
Direct manufacturing labour is limited to 600 hours a week and 400 hours is all that the company's outdated machines can run a week.The lawn mowers require 1.5 hours of labour and 1 machine hour.Power washers require 2.5 labour hours and 2 machine hours.
Required:
Formulate the linear programming objective function and constraints necessary to determine the optimal product mix.

Accepted Answer

@#IMG-DLM& Note: P≤ 300 is not necessary

Question 18

Opportunity cost is the contribution to income that is recognized through the use of limited resources available in the best alternative.

Accepted Answer

A) True 
 B)False

Question 19

When considering a project that will require production using otherwise idle resources,which of the following are TRUE?

Accepted Answer

A) Avoidable fixed costs are irrelevant. 
B) Only the variable costs of the project are relevant. 
C) Only financial factors should be considered. 
D) The project should not be undertaken if total revenue from the project is less than the total costs of production. 
E) In the short run,even if revenue is less than the total costs of production,the project could help the company's overall operating income. 
A) Avoidable fixed costs are irrelevant. 
B) Only the variable costs of the project are relevant. 
C) Only financial factors should be considered. 
D) The project should not be undertaken if total revenue from the project is less than the total costs of production. 
E) In the short run,even if revenue is less than the total costs of production,the project could help the company's overall operating income.

Question 20

If the $17,000 spent to purchase inventory could be invested and earn interest of $1,000,then the opportunity cost of holding inventory is $17,000.

Accepted Answer

A) True 
 B)False

Past costs that are unavoidable and unchangeable are known as

Which of the following anticipated future costs always differ among alternative courses of actions?

When managers are faced with constraints the product line with the higher contribution margin per unit is always the best choice to make.

The total cost difference between two separate alternatives in a decision making process is the net relevant cost.

Bid prices and costs that are relevant for regular orders are the same costs that are relevant for one-time-only special orders.

Which of the following is TRUE concerning opportunity costs?

Ted owns a small body shop.His major costs include labour,parts,and rent.In the decision making process,these costs are always considered to be

When opportunity costs exist,they are always relevant.

A customer can be considered to be a cost object,in the decision to add or drop a particular customer.

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?

Anticipated future costs that differ with alternative courses of action are known as relevant costs.

Opportunity cost is the contribution to income that is recognized through the use of limited resources available in the best alternative.

When considering a project that will require production using otherwise idle resources,which of the following are TRUE?

If the $17,000 spent to purchase inventory could be invested and earn interest of $1,000,then the opportunity cost of holding inventory is $17,000.

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

Past costs that are unavoidable and unchangeable are known as

Which of the following anticipated future costs always differ among alternative courses of actions?

When managers are faced with constraints the product line with the higher contribution margin per unit is always the best choice to make.

The total cost difference between two separate alternatives in a decision making process is the net relevant cost.

Bid prices and costs that are relevant for regular orders are the same costs that are relevant for one-time-only special orders.

Which of the following is TRUE concerning opportunity costs?

Ted owns a small body shop.His major costs include labour,parts,and rent.In the decision making process,these costs are always considered to be

When opportunity costs exist,they are always relevant.

A customer can be considered to be a cost object,in the decision to add or drop a particular customer.

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?

Anticipated future costs that differ with alternative courses of action are known as relevant costs.

Opportunity cost is the contribution to income that is recognized through the use of limited resources available in the best alternative.

When considering a project that will require production using otherwise idle resources,which of the following are TRUE?

If the $17,000 spent to purchase inventory could be invested and earn interest of $1,000,then the opportunity cost of holding inventory is $17,000.

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