Exam 23: Short-Run Decision Analysis

Which of the following is subtracted from contribution margin to obtain segment margin?

Avoidable costs are the direct variable costs and direct fixed costs traceable to the segments.

When are sunk costs omitted from decision analysis?

Why is the residual value of equipment relevant when considering the replacement of equipment?

During 2014,America Inc.produced,among other products,9,500 cameras,incurring the following unit costs: $5 in direct materials,$3 in direct labor,$2 in variable overhead,$4 in fixed overhead,$0.50 in variable selling and administrative expenses,and $1 in fixed selling and administrative expenses.An outsider had offered to produce the cameras for $12 each.Assuming that the factory space would have been idle otherwise,acceptance of the outside offer would have

Preparing reports related to short-run decisions falls under which stage of the management process?

The objective of a sales mix decision is to select the alternative that maximizes the contribution margin per constrained resource.

In a decision to eliminate a segment,remaining segments must have sufficient contribution margin to cover their own direct costs and the common costs.

All of the following are relevant in a sell-or-process-further decision except

Which of the following statements about incremental analysis is false?

Which of the following typically would be considered an incremental cost?

A sell-or-process-further decision is a decision about whether to sell a joint product at the split-off point or sell it after further processing.

The normal selling price of Carla Company's product is $3.00 per unit.The costs of production are: direct materials,$0.20;direct labor,$0.10;variable overhead,$0.40;and fixed overhead,$0.60 (based on normal capacity).The company has received a special order for 8,000 units at a unit sales price of $1.00.There is ample unused capacity to fill the order.If the order is accepted,operating income will

Make-or-buy decisions may lead to

Which of the following costs are the benefits that are forfeited or lost when one alternative is chosen over another?

The sales mix analysis,which uses incremental analysis to identify the relevant costs and revenues,consists of two steps.

An example of a constrained resource that may lead to the need for a sales mix decision is

Opportunity costs are ignored for decision making.

On November 15,2014,the Cooper Co.received a special order for 6,000 three-wood golf club sets.These golf clubs will be marketed in Asia.Seto Imports Inc. ,the purchasing company,wants the clubs bulk packaged and is willing to pay $72 per set for the clubs.The president of The Cooper Co.has gathered the following product costing information about the set of woods being discussed: · Direct materials (wood),$900 per 100 sets · Direct materials (metal shafts),$1,200 per 100 sets · Direct materials (grips),$200 per 100 sets · Direct labor is $27 per set · Variable manufacturing costs are $19 per set · Fixed manufacturing costs are 20 percent of direct labor dollars · Variable selling expenses are $14 per set · Variable shipping costs are $9 per set · Fixed general and administrative costs are 30 percent of direct labor dollars Bulk shipping costs will total $10,000,thus eliminating both variable selling and variable shipping costs from consideration.The company did not expect this order and will reach planned production capacity for the year.However,there is enough plant capacity for the special order.Round answers to two decimal places. a.Prepare an analysis for the president to use in deciding whether to accept or reject the offer by Seto Imports,Inc.What decision should be made? b.What is the lowest possible price The Cooper Co.could charge per set of woods and still make a $12,000 profit on this order? Round your answers to two decimal places.

Keller Company is evaluating its two divisions,North Division and South Division.Data for the North Division include sales of $250,000,variable costs of $125,000,and fixed costs of $200,000,50 percent of which are traceable to the division.Data for the South Division include sales of $300,000,variable costs of $175,000,and fixed costs of $225,000,60 percent of which are traceable to the division. -Divisional income (or segment margin)for North Division is