Question 1

A decision model involves a(n)________.

Accepted Answer

A)  informal method of making a choice at the lower level management using sensitivity analysis 
B)  formal method of making a choice that often involves both quantitative and qualitative analyses 
C)  informal method of making a choice which is discussed in detailed in the financial reports 
D)  formal method of making a choice at the lower level management using advanced management techniques such as balance scorecard 
A)  informal method of making a choice at the lower level management using sensitivity analysis 
B)  formal method of making a choice that often involves both quantitative and qualitative analyses 
C)  informal method of making a choice which is discussed in detailed in the financial reports 
D)  formal method of making a choice at the lower level management using advanced management techniques such as balance scorecard

Question 2

When evaluating a make-or-buy decision,which of the following needs to be considered?

Accepted Answer

A)  alternative uses of the production capacity 
B)  the original cost of the production equipment 
C)  pension costs to the current employees 
D)  material-handling costs that cannot be eliminated 
A)  alternative uses of the production capacity 
B)  the original cost of the production equipment 
C)  pension costs to the current employees 
D)  material-handling costs that cannot be eliminated

Question 3

Incremental revenue is the sum of differential revenues of two alternatives.

Accepted Answer

A) True 
 B)False

Question 4

When there is a constraining resource,a firm should attempt to maximize sales of the product or service with the greatest contribution margin per unit.

Accepted Answer

A) True 
 B)False

Question 5

The rent paid for an already existing facility is an example of a sunk cost.

Accepted Answer

A) True 
 B)False

Question 6

Differential revenue is the difference in total revenue between two alternatives.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following costs is relevant in a decision-making process?

Accepted Answer

A)  prepaid insurance costs 
B)  historical costs 
C)  sunk costs 
D)  variable costs 
A)  prepaid insurance costs 
B)  historical costs 
C)  sunk costs 
D)  variable costs

Question 8

Opportunity costs is defined as ________.

Accepted Answer

A)  the cost of manufacturing a one-time-only special order when a firm has excess capacity to make more products 
B)  the contribution to operating income that is forgone by not using a limited resource in its next-best alternative use 
C)  the sum of variable and fixed costs in a particular business function of the value chain, such as manufacturing costs or marketing costs 
D)  the sum of variable and fixed costs in all business functions of the value chain, such as manufacturing costs or marketing costs 
A)  the cost of manufacturing a one-time-only special order when a firm has excess capacity to make more products 
B)  the contribution to operating income that is forgone by not using a limited resource in its next-best alternative use 
C)  the sum of variable and fixed costs in a particular business function of the value chain, such as manufacturing costs or marketing costs 
D)  the sum of variable and fixed costs in all business functions of the value chain, such as manufacturing costs or marketing costs

Question 9

Answer the following questions using the information below:
Black Forrest manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $180 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Back Forrest's policy to add a 50% markup to full costs.
-Black Forrest is invited to bid on a one-time-only special order to supply 100 rustic tables.What is the lowest price Black Forrest should bid on this special order?

Accepted Answer

A)  $12,600 
B)  $14,400 
C)  $18,000 
D)  $23,000 
A)  $12,600 
B)  $14,400 
C)  $18,000 
D)  $23,000

Question 10

Qualitative factors ________.

Accepted Answer

A)  generally are easily measured in quantitative terms 
B)  are generally irrelevant for decision making 
C)  may include either financial or nonfinancial information 
D)  include customer satisfaction 
A)  generally are easily measured in quantitative terms 
B)  are generally irrelevant for decision making 
C)  may include either financial or nonfinancial information 
D)  include customer satisfaction

Question 11

A mathematical inequality or equality that must be appeased is known as a(n)________.

Accepted Answer

A)  business function. 
B)  constraint 
C)  operating policy 
D)  business function 
A)  business function. 
B)  constraint 
C)  operating policy 
D)  business function

Question 12

A restaurant is deciding whether it wants to update its image or not.It currently has a cozy appeal with an outdated dcor that is still in good condition,menus and carpet that need to be replaced anyway,and loyal customers.
 é Identify for the restaurant management
a.those costs that are relevant to this decision,
b.those costs that are not differential,
c.and qualitative considerations.

Accepted Answer

For the decision of whether to update th

Question 13

Smiley Face Company manufactures signs from direct materials to the finished product.This is considered ________.

Accepted Answer

A)  insourcing 
B)  outsourcing 
C)  right-shoring 
D)  fragmentation 
A)  insourcing 
B)  outsourcing 
C)  right-shoring 
D)  fragmentation

Question 14

Answer the following questions using the information below:
The management accountant for Giada's Book Store has prepared the following income statement for the most current year:
 $\begin{array}{lrrrr}
&\text { Cookbook }&\text { Travel Book }&\text { Classics }&\text { Total }\
\text { Sales } & \$ 60,000 & \$ 100,000 & \$ 40,000 & \$ 200,000 \
\text { Cost of goods sold } & 36,000 & 65,000 & 20,000 & 121,000 \
\text { Contribution margin } & 24,000 & 35,000 & 20,000 & 79,000 \
\text { Order and delivery processing } & 18,000 & 21,000 & 8,000 & 47,000\
\text { Rent (per sq. foot used) } & 2,000 & 1,000 & 3,000 & 6,000 \
\text { Allocated corporate costs } & 7,000 & 7,000 & 7,000 & 21,000 \
\text { Corporate profit } & \$(3,000) & \$ 6,000 & \$ 2,000 & \$ 5,000
\end{array}$
-If the travel book line had been discontinued,corporate profits for the current year would have decreased by ________.

Accepted Answer

A)  $35,000 
B)  $14,000 
C)  $13,000 
D)  $6,000 
A)  $35,000 
B)  $14,000 
C)  $13,000 
D)  $6,000

Question 15

Place the following steps from the five-step decision process in order: 
$A =$ Obtain information including historical costs
$\mathrm { B } =$ Evaluate performance to provide feed back
$\mathrm { C } =$ Make decisions choosing among altematives
$D =$ Make predictions about the future
$\mathrm { E } =$ Identify the problem and uncertainties

Accepted Answer

A)  $ A, E, D, B, C $ 
B)  $ \mathrm{C}_{,} \mathrm{D}_{,} \mathrm{E}_{,} \mathrm{~A}_{,} \mathrm{~B} $ 
C)  $ \mathrm{E}_{,} \mathrm{~A}_{,} \mathrm{D}, \mathrm{C}, \mathrm{B} $ 
D)  D, $ C_{,} B_{,} A_{,} E $ 
A)  $ A, E, D, B, C $ 
B)  $ \mathrm{C}_{,} \mathrm{D}_{,} \mathrm{E}_{,} \mathrm{~A}_{,} \mathrm{~B} $ 
C)  $ \mathrm{E}_{,} \mathrm{~A}_{,} \mathrm{D}, \mathrm{C}, \mathrm{B} $ 
D)  D, $ C_{,} B_{,} A_{,} E $

Question 16

Which of the following is an assumption of linear programming?

Accepted Answer

A)  Average variable costs remain constant throughout the year. 
B)  Opportunity costs are irrelevant in decision making. 
C)  Few sunk costs are relevant in decision making. 
D)  All costs are either variable or fixed for a single cost driver. 
A)  Average variable costs remain constant throughout the year. 
B)  Opportunity costs are irrelevant in decision making. 
C)  Few sunk costs are relevant in decision making. 
D)  All costs are either variable or fixed for a single cost driver.

Question 17

If Talium Services Inc.does not use one of its limited resources in the best possible way,the lost contribution to income could be called a(n)________.

Accepted Answer

A)  business function cost 
B)  carrying cost 
C)  opportunity cost 
D)  sunk cost 
A)  business function cost 
B)  carrying cost 
C)  opportunity cost 
D)  sunk cost

Question 18

Are relevant revenues and relevant costs the only information needed by managers to select among alternatives? Explain using examples.

Accepted Answer

No,relevant revenues and costs provide a

Question 19

To maximize profits,managers should produce more of the product with the greatest contribution margin per unit of the constraining resource.

Accepted Answer

A) True 
 B)False

Question 20

Compare and contrast the theory of constraints and activity based costing.Which is more useful in short-run and long-run management of costs?

Accepted Answer

The theory of constraints emphasizes man

A decision model involves a(n)________.

When evaluating a make-or-buy decision,which of the following needs to be considered?

Incremental revenue is the sum of differential revenues of two alternatives.

When there is a constraining resource,a firm should attempt to maximize sales of the product or service with the greatest contribution margin per unit.

The rent paid for an already existing facility is an example of a sunk cost.

Differential revenue is the difference in total revenue between two alternatives.

Which of the following costs is relevant in a decision-making process?

Opportunity costs is defined as ________.

Qualitative factors ________.

A mathematical inequality or equality that must be appeased is known as a(n)________.

Smiley Face Company manufactures signs from direct materials to the finished product.This is considered ________.

Which of the following is an assumption of linear programming?

If Talium Services Inc.does not use one of its limited resources in the best possible way,the lost contribution to income could be called a(n)________.

Are relevant revenues and relevant costs the only information needed by managers to select among alternatives? Explain using examples.

To maximize profits,managers should produce more of the product with the greatest contribution margin per unit of the constraining resource.

Compare and contrast the theory of constraints and activity based costing.Which is more useful in short-run and long-run management of costs?

The Manager and Management Accounting

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

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

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 and Time

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

A decision model involves a(n)________.

When evaluating a make-or-buy decision,which of the following needs to be considered?

Incremental revenue is the sum of differential revenues of two alternatives.

When there is a constraining resource,a firm should attempt to maximize sales of the product or service with the greatest contribution margin per unit.

The rent paid for an already existing facility is an example of a sunk cost.

Differential revenue is the difference in total revenue between two alternatives.

Which of the following costs is relevant in a decision-making process?

Opportunity costs is defined as ________.

Qualitative factors ________.

A mathematical inequality or equality that must be appeased is known as a(n)________.

Smiley Face Company manufactures signs from direct materials to the finished product.This is considered ________.

Which of the following is an assumption of linear programming?

If Talium Services Inc.does not use one of its limited resources in the best possible way,the lost contribution to income could be called a(n)________.

Are relevant revenues and relevant costs the only information needed by managers to select among alternatives? Explain using examples.

To maximize profits,managers should produce more of the product with the greatest contribution margin per unit of the constraining resource.

Compare and contrast the theory of constraints and activity based costing.Which is more useful in short-run and long-run management of costs?

The Manager and Management Accounting

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

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

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 and Time

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