Question 1

Flexible resources are acquired way ahead of time.

Accepted Answer

A) True 
 B)False

Question 2

Bollinger Company's 2014 income statement is as follows:
   In an attempt to improve the company's profit performance, management is considering a number of alternative actions.
Required:
Determine the effect of each of the following on monthly profit. Each situation is to be evaluated independently of all the others.

Accepted Answer

The answer of Bollinger Company's 2014 income statement is as...

Question 3

A decision to accept or reject a specially priced order is an example of
a __________ decision.
or

Accepted Answer

special-or

Question 4

A decision that focuses on whether a specially priced order should be accepted or rejected is a

Accepted Answer

A)  special-order decision. 
B)  keep-or-drop a product-line decision. 
C)  make-or-buy decision. 
D)  both a and c. 
A)  special-order decision. 
B)  keep-or-drop a product-line decision. 
C)  make-or-buy decision. 
D)  both a and c.

Question 5

A keep-or-drop decision uses irrelevant cost analysis to determine whether to continue or discontinue a segment or line of business.

Accepted Answer

A) True 
 B)False

Question 6

Figure 17-1 The following data pertains to the Montrose Company's three products:
  Refer to Figure 17-1. When Montrose converted over to ABC it discovered the following:
  The operating income for Montrose would be

Accepted Answer

A)  $8,500. 
B)  $9,000. 
C)  $19,000. 
D)  $27,000. 
A)  $8,500. 
B)  $9,000. 
C)  $19,000. 
D)  $27,000.

Question 7

In a keep-or-drop decision, the __________ income or loss determines whether a segment is kept or dropped.

Accepted Answer

The answer of In a keep-or-drop decision, the __________ income...

Question 8

Figure 17-1 The following data pertains to the Montrose Company's three products:
  Refer to Figure 17-1. When Montrose converted over to ABC it discovered the following:
  The product margin for product M using ABC would be

Accepted Answer

A)  $9,000. 
B)  $19,000. 
C)  $13,840. 
D)  $27,000. 
A)  $9,000. 
B)  $19,000. 
C)  $13,840. 
D)  $27,000.

Question 9

Relevant costs are

Accepted Answer

A)  past costs. 
B)  future costs. 
C)  full costs. 
D)  cost drivers. 
A)  past costs. 
B)  future costs. 
C)  full costs. 
D)  cost drivers.

Question 10

Modesto Company produces CD Players for home stereo units. The CD Players are sold to retail stores for $30. Manufacturing and other costs are as follows:   The variable distribution costs are for transportation to the retail stores. The current production and sales volume is 20,000 per year. Capacity is 25,000 units per year.
A San Diego wholesaler has proposed to place a special one-time order of 10,000 units at a reduced price of $24 per unit. The wholesaler would pay all distribution costs, but there would be additional fixed selling and administrative costs of $3,000. All other information remains the same as the original data. What is the effect on profits if the special order is accepted?

Accepted Answer

A)  increase of $12,000 
B)  increase of $57,000 
C)  increase of $75,000 
D)  decrease of $168,000 
A)  increase of $12,000 
B)  increase of $57,000 
C)  increase of $75,000 
D)  decrease of $168,000

Question 11

Rosario Manufacturing Company had the following unit costs:   A one-time customer has offered to buy 2,750 units at a special price of $49 per unit. Assuming that sufficient unused production capacity exists to produce the order and no regular customers will be affected by the order, how much additional profit (loss) will be generated by accepting the special order?

Accepted Answer

A)  $134,750 profit 
B)  $19,250 profit 
C)  $84,000 loss 
D)  $16,500 loss 
A)  $134,750 profit 
B)  $19,250 profit 
C)  $84,000 loss 
D)  $16,500 loss

Question 12

If there is excess capacity, the minimum acceptable price for a special order must cover

Accepted Answer

A)  variable costs associated with the special order. 
B)  variable and fixed manufacturing costs associated with the special order. 
C)  variable and incremental fixed costs associated with the special order. 
D)  variable costs and incremental fixed costs associated with the special order plus the contribution margin usually earned on regular units. 
A)  variable costs associated with the special order. 
B)  variable and fixed manufacturing costs associated with the special order. 
C)  variable and incremental fixed costs associated with the special order. 
D)  variable costs and incremental fixed costs associated with the special order plus the contribution margin usually earned on regular units.

Question 13

An irrelevant cost is one that is the same for more than one alternative and has no bearing on future decisions.

Accepted Answer

A) True 
 B)False

Question 14

Campbell Company has an annual capacity of 18,000 units. Budgeted operating results for 2014 are as follows:
   A foreign wholesaler wants to buy 1,000 units at a price of $40 per unit. All fixed costs would remain within the relevant range. Variable selling costs on the special order would be the same as variable selling costs for regular orders.
Required:

Accepted Answer

The answer of Campbell Company has an annual capacity of...

Question 15

A sunk cost is irrelevant because it has no influence over future decisions, so it is depreciated.

Accepted Answer

A) True 
 B)False

Question 16

Changes in cost of an activity can occur if the demand for the resource exceeds the supply or if the demand for the resource drops.

Accepted Answer

A) True 
 B)False

Question 17

Information about three joint products follows:   The cost of the joint process is $60,000. Which of the joint products should be sold at split-off?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  both A and B 
A)  A 
B)  B 
C)  C 
D)  both A and B

Question 18

Which of the following costs is relevant to a make-or-buy decision?

Accepted Answer

A)  original cost of the production equipment 
B)  annual depreciation of the equipment 
C)  the amount that would be received if the production equipment were sold 
D)  the cost of direct materials purchased last month and used to manufacture the component 
A)  original cost of the production equipment 
B)  annual depreciation of the equipment 
C)  the amount that would be received if the production equipment were sold 
D)  the cost of direct materials purchased last month and used to manufacture the component

Question 19

The operations of Smithsonian Corporation are divided into the Manhattan Division and the Bronx Division. Projections for the next year are as follows:   Operating income for Smithsonian Corporation as a whole if the Bronx Division were dropped would be

Accepted Answer

A)  $40,000. 
B)  $22,500. 
C)  $50,000. 
D)  $60,000. 
A)  $40,000. 
B)  $22,500. 
C)  $50,000. 
D)  $60,000.

Question 20

Which of the following items would be classified as flexible resources?

Accepted Answer

A)  salaried employees 
B)  depreciation on building 
C)  fuel to generate electricity internally 
D)  lease on machinery 
A)  salaried employees 
B)  depreciation on building 
C)  fuel to generate electricity internally 
D)  lease on machinery

Flexible resources are acquired way ahead of time.

A decision to accept or reject a specially priced order is an example of a __________ decision. or

A decision that focuses on whether a specially priced order should be accepted or rejected is a

A keep-or-drop decision uses irrelevant cost analysis to determine whether to continue or discontinue a segment or line of business.

Figure 17-1 The following data pertains to the Montrose Company's three products: Refer to Figure 17-1. When Montrose converted over to ABC it discovered the following: The operating income for Montrose would be

In a keep-or-drop decision, the __________ income or loss determines whether a segment is kept or dropped.

Figure 17-1 The following data pertains to the Montrose Company's three products: Refer to Figure 17-1. When Montrose converted over to ABC it discovered the following: The product margin for product M using ABC would be

Relevant costs are

If there is excess capacity, the minimum acceptable price for a special order must cover

An irrelevant cost is one that is the same for more than one alternative and has no bearing on future decisions.

A sunk cost is irrelevant because it has no influence over future decisions, so it is depreciated.

Changes in cost of an activity can occur if the demand for the resource exceeds the supply or if the demand for the resource drops.

Information about three joint products follows: The cost of the joint process is $60,000. Which of the joint products should be sold at split-off?

Which of the following costs is relevant to a make-or-buy decision?

The operations of Smithsonian Corporation are divided into the Manhattan Division and the Bronx Division. Projections for the next year are as follows: Operating income for Smithsonian Corporation as a whole if the Bronx Division were dropped would be

Which of the following items would be classified as flexible resources?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 17: Activity Resource Usage Model and Tactical Decision Making

Flexible resources are acquired way ahead of time.

A decision to accept or reject a specially priced order is an example of a __________ decision. or

A decision that focuses on whether a specially priced order should be accepted or rejected is a

A keep-or-drop decision uses irrelevant cost analysis to determine whether to continue or discontinue a segment or line of business.

Figure 17-1 The following data pertains to the Montrose Company's three products: Refer to Figure 17-1. When Montrose converted over to ABC it discovered the following: The operating income for Montrose would be

In a keep-or-drop decision, the __________ income or loss determines whether a segment is kept or dropped.

Figure 17-1 The following data pertains to the Montrose Company's three products: Refer to Figure 17-1. When Montrose converted over to ABC it discovered the following: The product margin for product M using ABC would be

Relevant costs are

If there is excess capacity, the minimum acceptable price for a special order must cover

An irrelevant cost is one that is the same for more than one alternative and has no bearing on future decisions.

A sunk cost is irrelevant because it has no influence over future decisions, so it is depreciated.

Changes in cost of an activity can occur if the demand for the resource exceeds the supply or if the demand for the resource drops.

Information about three joint products follows: The cost of the joint process is $60,000. Which of the joint products should be sold at split-off?

Which of the following costs is relevant to a make-or-buy decision?

The operations of Smithsonian Corporation are divided into the Manhattan Division and the Bronx Division. Projections for the next year are as follows: Operating income for Smithsonian Corporation as a whole if the Bronx Division were dropped would be

Which of the following items would be classified as flexible resources?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters