Exam 11: Decision Making and Relevant Information

Granfield Corporation manufactures two products,Product A and Product B.The following information was available: If Granfield Corporation could produce and sell either 10,400 units of Product A or 5,900 units of Product B at full capacity,it should produce and sell ________.

Throughput margin is equal to revenues minus direct materials and direct labor of the cost of goods sold.

Vien's Fashion Company retains the services of Kennywood Textiles to perform stain control treatments on its women's dresses.This is practice is known as ________.

Which of the following are potential problems managers face in relevant-cost analysis?

Overhead costs allocated to the sales office and individual customers are always relevant when deciding whether to drop a customer.

When deciding whether to discontinue a segment of a business,relevant costs include ________.

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 machine-hour?

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

Canary's Products Inc.manufactures three different product lines,Basic,Better,and Best.Considerable market demand exists for all models.The following per unit data apply: a.For each model,compute the contribution margin per unit. b.For each model,compute the contribution margin per machine-hour. c.If there is excess capacity,which model is the most profitable to produce? Why? d.If there is a machine breakdown,which model is the most profitable to produce? Why? e.How can Canary encourage its sales people to promote the more profitable model?

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. If the price increase is implemented,operating profit is projected to ________.

When replacing an old machine with a new machine,the book value of the old machine is a relevant cost.

When capacity is constrained,the relevant revenues and costs of any alternative equal the incremental future revenues and costs plus the opportunity cost.

H.J.Manufacturing produces 10,000 units of a part that is used in their assembly process.The production costs are as follows: H.J.Manufacturing has the option of purchasing these units from an outside supplier at $10.75 per unit.If the part is outsourced,40% of the fixed costs cannot be immediately converted to other uses. a.Describe avoidable costs.What amount of the part's production costs is avoidable? b.Should H.J.outsource the part? Why or why not? c.What other items should H.J.consider before outsourcing any of the parts it currently manufactures?

A relevant revenue is revenue that is a(n)________.

Marketing costs will be an irrelevant cost in the decision making of a one-time-only special order.

When replacing an old machine with a new machine,the new machine's depreciation expense is relevant.

Under the opportunity-cost approach,the relevant cost of any alternative is the incremental of the alternative plus the opportunity cost of the profit foregone from choosing the alternative.

The cost to produce Part A was $20 per unit in 2013 and in 2014 it has increased to $22 per unit.In 2014,Supplier ABC has offered to supply Part A for $18 per unit.For the make-or-buy decision ________.

Discontinuing unprofitable products will ________.

An example of a qualitative factor for the decision-making process is ________