Question 1

Which of the following is true of an opportunity cost?

Accepted Answer

A) It is the income foregone by not using a resource in an alternative way. 
B) The higher the opportunity costs,the lower is the relevant cost. 
C) It is recorded as an expense in the accounting records. 
D) It is an unavoidable cost that cannot be changed no matter what action is taken. 
A) It is the income foregone by not using a resource in an alternative way. 
B) The higher the opportunity costs,the lower is the relevant cost. 
C) It is recorded as an expense in the accounting records. 
D) It is an unavoidable cost that cannot be changed no matter what action is taken.

Question 2

Outsourcing is purchasing from outside vendors parts and other goods instead of producing your own and contracting for services instead of providing them yourself.

Accepted Answer

A) True 
 B)False

Question 3

Flash City Inc.manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year.With a 75-cent price increase,demand is expected to fall by 7,000 units.
 
Would you recommend the 75-cent price increase?

Accepted Answer

A) No,because demand decreased. 
B) No,because the selling price increases. 
C) Yes,because contribution margin per unit increases. 
D) Yes,because operating profits increase. 
A) No,because demand decreased. 
B) No,because the selling price increases. 
C) Yes,because contribution margin per unit increases. 
D) Yes,because operating profits increase.

Question 4

W.T.Ginsburg Engine Company manufactures part ACT31107 used in several of its engine models.Monthly production costs for 1,010 units are as follows:
 
It is estimated that 7% of the fixed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier.W.T.Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $94.75 per unit.
The maximum price that W.T.Ginsburg Engine Company should be willing to pay the outside supplier is
________.

Accepted Answer

A) $82 per ACT31107 part 
B) $83.43 per ACT31107 part 
C) $100 per ACT31107 part 
D) $101.25 per ACT31107 part 
A) $82 per ACT31107 part 
B) $83.43 per ACT31107 part 
C) $100 per ACT31107 part 
D) $101.25 per ACT31107 part

Question 5

The management accountant for Giada's Book Store has prepared the following income statement for the most current year:
 
If the cookbook product line had been discontinued prior to this year,the company would have reported ________.

Accepted Answer

A) greater corporate profits 
B) the same amount of corporate profits 
C) less corporate profits 
D) resulting profits cannot be determined 
A) greater corporate profits 
B) the same amount of corporate profits 
C) less corporate profits 
D) resulting profits cannot be determined

Question 6

Kinnane's Fine Furniture manufactures two models,Standard and Premium.Weekly demand is estimated to be 100 units of the Standard Model and 77 units of the Premium Model.The following per unit data apply:
 
The contribution per machine-hour is ________.

Accepted Answer

A) $24 for Standard,$24 for Premium 
B) $144 for Standard,$144 for Premium 
C) $18 for Standard,$18 for Premium 
D) $4 for Standard,$4 for Premium 
A) $24 for Standard,$24 for Premium 
B) $144 for Standard,$144 for Premium 
C) $18 for Standard,$18 for Premium 
D) $4 for Standard,$4 for Premium

Question 7

When capacity is constrained,relevant costs equal incremental costs plus opportunity costs.

Accepted Answer

A) True 
 B)False

Question 8

Snapper Tool Company has plenty of excess capacity to accept a special order.Shown below is an "what-if" analysis of the special order.Which of the following is the correct decision and reason?

Accepted Answer

A) Yes,since the goal is to fill capacity as much as possible to keep fixed overhead variances as low as possible. 
B) No,the company will only break even. 
C) No,since only the employees will benefit from this in that they will earn more overtime. 
D) Yes,since operating profits will most likely increase. 
A) Yes,since the goal is to fill capacity as much as possible to keep fixed overhead variances as low as possible. 
B) No,the company will only break even. 
C) No,since only the employees will benefit from this in that they will earn more overtime. 
D) Yes,since operating profits will most likely increase.

Question 9

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

Accepted Answer

A) focused on short-term performance 
B) based solely on quantitative factors 
C) consistent with the decision model 
D) based solely on qualitative factors 
A) focused on short-term performance 
B) based solely on quantitative factors 
C) consistent with the decision model 
D) based solely on qualitative factors

Question 10

In linear programming,the goals of management are expressed in ________.

Accepted Answer

A) an objective function 
B) constraints 
C) operating policies 
D) business functions 
A) an objective function 
B) constraints 
C) operating policies 
D) business functions

Question 11

When using the five-step decision process,which one of the following steps should be done last?

Accepted Answer

A) obtain information 
B) choose an alternative 
C) evaluation and feedback 
D) implementing the decision 
A) obtain information 
B) choose an alternative 
C) evaluation and feedback 
D) implementing the decision

Question 12

Springer Products 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:
 
Which model has the greatest contribution margin per unit?

Accepted Answer

A) Model X 
B) Model Y 
C) Model Z 
D) Both Model X and Model Y have the highest and same contribution margin per unit 
A) Model X 
B) Model Y 
C) Model Z 
D) Both Model X and Model Y have the highest and same contribution margin per unit

Question 13

How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.

Accepted Answer

Since managers will act in their self in

Question 14

When making decisions ________.

Accepted Answer

A) qualitative factors are not relevant as they can't be quantified 
B) more weight should be given to quantitative factors 
C) appropriate weight must be given to both quantitative and qualitative factors 
D) quantitative factors are relevant but qualitative factors are rarely relevant 
A) qualitative factors are not relevant as they can't be quantified 
B) more weight should be given to quantitative factors 
C) appropriate weight must be given to both quantitative and qualitative factors 
D) quantitative factors are relevant but qualitative factors are rarely relevant

Question 15

Sunk costs are irrelevant to decision making.

Accepted Answer

A) True 
 B)False

Question 16

For make-or-buy decisions,relevant costs include ________.

Accepted Answer

A) incremental costs plus sunk costs 
B) incremental costs plus opportunity costs 
C) differential costs plus fixed costs 
D) incremental costs plus differential costs 
A) incremental costs plus sunk costs 
B) incremental costs plus opportunity costs 
C) differential costs plus fixed costs 
D) incremental costs plus differential costs

Question 17

Relevant data in a make-or-buy decision of a part include which of the following?

Accepted Answer

A) The portion of fixed costs that would be incurred whether the product is made or purchased 
B) Some portion of fixed costs that would be saved if the product is outsourced 
C) Annual plant insurance costs 
D) Management consultant fees to restructure the organization framework of the company and improve overall strategic planning 
A) The portion of fixed costs that would be incurred whether the product is made or purchased 
B) Some portion of fixed costs that would be saved if the product is outsourced 
C) Annual plant insurance costs 
D) Management consultant fees to restructure the organization framework of the company and improve overall strategic planning

Question 18

How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity?

Accepted Answer

Management should attempt to maximize ou

Which of the following is true of an opportunity cost?

Outsourcing is purchasing from outside vendors parts and other goods instead of producing your own and contracting for services instead of providing them yourself.

Flash City Inc.manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year.With a 75-cent price increase,demand is expected to fall by 7,000 units. Would you recommend the 75-cent price increase?

The management accountant for Giada's Book Store has prepared the following income statement for the most current year: If the cookbook product line had been discontinued prior to this year,the company would have reported ________.

Kinnane's Fine Furniture manufactures two models,Standard and Premium.Weekly demand is estimated to be 100 units of the Standard Model and 77 units of the Premium Model.The following per unit data apply: The contribution per machine-hour is ________.

When capacity is constrained,relevant costs equal incremental costs plus opportunity costs.

Snapper Tool Company has plenty of excess capacity to accept a special order.Shown below is an "what-if" analysis of the special order.Which of the following is the correct decision and reason?

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

In linear programming,the goals of management are expressed in ________.

When using the five-step decision process,which one of the following steps should be done last?

Springer Products 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: Which model has the greatest contribution margin per unit?

How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.

When making decisions ________.

Sunk costs are irrelevant to decision making.

For make-or-buy decisions,relevant costs include ________.

Relevant data in a make-or-buy decision of a part include which of the following?

How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity?

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

Which of the following is true of an opportunity cost?

Outsourcing is purchasing from outside vendors parts and other goods instead of producing your own and contracting for services instead of providing them yourself.

Flash City Inc.manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year.With a 75-cent price increase,demand is expected to fall by 7,000 units. Would you recommend the 75-cent price increase?

The management accountant for Giada's Book Store has prepared the following income statement for the most current year: If the cookbook product line had been discontinued prior to this year,the company would have reported ________.

Kinnane's Fine Furniture manufactures two models,Standard and Premium.Weekly demand is estimated to be 100 units of the Standard Model and 77 units of the Premium Model.The following per unit data apply: The contribution per machine-hour is ________.

When capacity is constrained,relevant costs equal incremental costs plus opportunity costs.

Snapper Tool Company has plenty of excess capacity to accept a special order.Shown below is an "what-if" analysis of the special order.Which of the following is the correct decision and reason?

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

In linear programming,the goals of management are expressed in ________.

When using the five-step decision process,which one of the following steps should be done last?

Springer Products 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: Which model has the greatest contribution margin per unit?

How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.

When making decisions ________.

Sunk costs are irrelevant to decision making.

For make-or-buy decisions,relevant costs include ________.

Relevant data in a make-or-buy decision of a part include which of the following?

How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity?

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