Question 1

Which product pricing factor is primarily used by the majority of American companies?

Accepted Answer

A) Market-based 
B) Cost-based 
C) Quality-based 
D) Quantity-based 
A) Market-based 
B) Cost-based 
C) Quality-based 
D) Quantity-based

Question 2

How is differential analysis used to determine when to add or drop parts of an operation?

Accepted Answer

A) If the differential costs required to provide the product for sale exceeds the differential revenue from the sale of a product,then the product generates profits and the firm should continue its production. 
B) If the differential costs required to provide the product for sale exceeds the differential revenue from the sale of a product,then the product generates losses and the firm should continue its production. 
C) If the differential revenue from the sale of a product exceeds the differential costs required to provide the product for sale,then the product generates profits and the firm should continue its production. 
D) If the differential revenue from the sale of a product exceeds the differential costs required to provide the product for sale,then the product generates profits and the firm should discontinue its production. 
A) If the differential costs required to provide the product for sale exceeds the differential revenue from the sale of a product,then the product generates profits and the firm should continue its production. 
B) If the differential costs required to provide the product for sale exceeds the differential revenue from the sale of a product,then the product generates losses and the firm should continue its production. 
C) If the differential revenue from the sale of a product exceeds the differential costs required to provide the product for sale,then the product generates profits and the firm should continue its production. 
D) If the differential revenue from the sale of a product exceeds the differential costs required to provide the product for sale,then the product generates profits and the firm should discontinue its production.

Question 3

What is the analysis of differences among particular alternative actions called?

Accepted Answer

A) incremental analysis. 
B) marginal analysis. 
C) differential analysis. 
D) All of the answers are correct. 
A) incremental analysis. 
B) marginal analysis. 
C) differential analysis. 
D) All of the answers are correct.

Question 4

The internal focus on continuous improvement is the key to which of the following?

Accepted Answer

A) cutting costs. 
B) increasing employee morale. 
C) profit maximization. 
D) cutting profits. 
A) cutting costs. 
B) increasing employee morale. 
C) profit maximization. 
D) cutting profits.

Question 5

The economic order quantity model derives the optimal number of which of the following costs?

Accepted Answer

A) fixed and variable costs. 
B) orders or production runs. 
C) direct materials and direct labor. 
D) direct materials and conversion costs. 
A) fixed and variable costs. 
B) orders or production runs. 
C) direct materials and direct labor. 
D) direct materials and conversion costs.

Question 6

What costs can be justified when a firm enters into a long-term contractual relationship to supply a product?

Accepted Answer

A) Variable costs 
B) Fixed costs 
C) Full costs 
D) Absorption costs 
A) Variable costs 
B) Fixed costs 
C) Full costs 
D) Absorption costs

Question 7

How is differential analysis used to determine when to add or drop parts of an operation?

Accepted Answer

In the short-run,capacity does not chang

Question 8

What makes a cost relevant for decision making?

Accepted Answer

A cost is relevant if it makes a differe

Question 9

BLUE Company
BLUE Company needs 10,000 units of a certain part to be used in production.If BLUE buys the part from RED Company instead of making it,BLUE could not use the present facilities for another manufacturing activity.Sixty percent (60%)of the fixed overhead applied will continue regardless of what decision is made.
The following quantitative information is available regarding the situation presented:
 
Refer to BLUE Company.Which alternative is more desirable for BLUE and by what amount?

Accepted Answer

A) Buy,$40,000 
B) Make,$40,000 
C) Buy,$50,000 
D) Make,$50,000 
A) Buy,$40,000 
B) Make,$40,000 
C) Buy,$50,000 
D) Make,$50,000

Question 10

Predatory pricing

Accepted Answer

A) occurs when a business deliberately prices below its costs in an effort to drive out competitors. 
B) occurs when a business unintentionally prices below its costs which results in driving out competitors. 
C) is legal in all 50 States. 
D) is generally accepted in the United States. 
A) occurs when a business deliberately prices below its costs in an effort to drive out competitors. 
B) occurs when a business unintentionally prices below its costs which results in driving out competitors. 
C) is legal in all 50 States. 
D) is generally accepted in the United States.

Question 11

In deciding whether to manufacture a part or buy it from an outside vendor,which of the following represents a cost that is not relevant to the short-run decision?

Accepted Answer

A) direct labor. 
B) variable overhead. 
C) fixed overhead that will be avoided if the part is bought from an outside vendor. 
D) fixed overhead that will continue even if the part is bought from an outside vendor. 
A) direct labor. 
B) variable overhead. 
C) fixed overhead that will be avoided if the part is bought from an outside vendor. 
D) fixed overhead that will continue even if the part is bought from an outside vendor.

Question 12

Which of the following is a method of managing purchasing,production,and sales,by which the firm attempts to produce each item only as needed for the next step in the production process?

Accepted Answer

A) Flexible manufacturing practices 
B) Just-in-time inventory 
C) Theory of constraints 
D) Total quality management 
A) Flexible manufacturing practices 
B) Just-in-time inventory 
C) Theory of constraints 
D) Total quality management

Question 13

For the past 10 years,Husky Company has produced the small gas motors that fit into its main product line of weed cutting machines.As material costs have steadily increased,the Controller of Husky Company is reviewing the decision to continue to make the small motors and has identified the following facts:
 
Which of the items above are relevant to the decision that the controller has to make?

Accepted Answer

A) 1,3,and 4 
B) 2,3,and 4 
C) 2,3,4,and 5 
D) 1,2,4,and 5 
A) 1,3,and 4 
B) 2,3,and 4 
C) 2,3,4,and 5 
D) 1,2,4,and 5

Question 14

Which product pricing factor is primarily used by the majority of Japanese,Irish,and English companies?

Accepted Answer

A) Market-based 
B) Cost-based 
C) Quality-based 
D) Quantity-based 
A) Market-based 
B) Cost-based 
C) Quality-based 
D) Quantity-based

Question 15

With just-in-time inventory,what does a firm attempt to do?

Accepted Answer

A) Produce each item only as needed for the next step in the production process. 
B) Time purchases so that items arrive just in time for production. 
C) Time purchases so that items arrive just in time for sale. 
D) All of the answers are correct. 
A) Produce each item only as needed for the next step in the production process. 
B) Time purchases so that items arrive just in time for production. 
C) Time purchases so that items arrive just in time for sale. 
D) All of the answers are correct.

Question 16

Grizzly Company
Grizzly Company manufactures footballs.The forecasted income statement for the year before any special orders is as follows:
 
Refer to Grizzly Company.Fixed costs included in the above forecasted income statement are $1,200,000 in manufacturing CGS and $100,000 in selling expenses.Grizzly received a special order offering to buy 50,000 footballs for $7.50 each.There will be no additional selling expenses if Grizzly accepts.Assume Grizzly has sufficient capacity to manufacture 50,000 more footballs.The unit relevant cost for Grizzly's decision is

Accepted Answer

A) $8.00 
B) $5.00 
C) $8.75 
D) $5.75 
A) $8.00 
B) $5.00 
C) $8.75 
D) $5.75

Question 17

During the joint production process,the costs incurred up to the splitoff point are known as which of the following?

Accepted Answer

A) joint costs. 
B) sunk costs. 
C) fixed costs. 
D) lost costs. 
A) joint costs. 
B) sunk costs. 
C) fixed costs. 
D) lost costs.

Question 18

Dropping a product line.Timepiece Products,a clock manufacturer,operates at capacity.Constrained by machine time,the company decides to drop the most unprofitable of its three product lines.The accounting department came up with the following data from last year's operations:
   
Required:
Which line should Timepiece Products drop? (Hint: Compute the contribution per machine hour because machine time is the constraint. )
(Timepiece Products;dropping a product line. )

Accepted Answer

@#IMG-DLM&_TB2144_00 (a)$25 = $10/0.4 ho

Question 19

The theory of constraints focuses on which of the following?

Accepted Answer

A) throughput contribution. 
B) investments. 
C) other operating costs. 
D) All of the answers are correct. 
A) throughput contribution. 
B) investments. 
C) other operating costs. 
D) All of the answers are correct.

Question 20

Which product pricing practice is used by the majority of Japanese companies in assembly-type operations (e.g.electronics and automobiles)?

Accepted Answer

A) Variable costs,only 
B) Fixed costs,only 
C) Full costs 
D) Absorption costs 
A) Variable costs,only 
B) Fixed costs,only 
C) Full costs 
D) Absorption costs

Which product pricing factor is primarily used by the majority of American companies?

How is differential analysis used to determine when to add or drop parts of an operation?

What is the analysis of differences among particular alternative actions called?

The internal focus on continuous improvement is the key to which of the following?

The economic order quantity model derives the optimal number of which of the following costs?

What costs can be justified when a firm enters into a long-term contractual relationship to supply a product?

How is differential analysis used to determine when to add or drop parts of an operation?

What makes a cost relevant for decision making?

Predatory pricing

In deciding whether to manufacture a part or buy it from an outside vendor,which of the following represents a cost that is not relevant to the short-run decision?

Which of the following is a method of managing purchasing,production,and sales,by which the firm attempts to produce each item only as needed for the next step in the production process?

Which product pricing factor is primarily used by the majority of Japanese,Irish,and English companies?

With just-in-time inventory,what does a firm attempt to do?

During the joint production process,the costs incurred up to the splitoff point are known as which of the following?

The theory of constraints focuses on which of the following?

Which product pricing practice is used by the majority of Japanese companies in assembly-type operations (e.g.electronics and automobiles)?

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Allocating Costs to Responsibility Centers

Filters

Exam 7: Differential Cost Analysis for Operating Decisions

Which product pricing factor is primarily used by the majority of American companies?

How is differential analysis used to determine when to add or drop parts of an operation?

What is the analysis of differences among particular alternative actions called?

The internal focus on continuous improvement is the key to which of the following?

The economic order quantity model derives the optimal number of which of the following costs?

What costs can be justified when a firm enters into a long-term contractual relationship to supply a product?

How is differential analysis used to determine when to add or drop parts of an operation?

What makes a cost relevant for decision making?

Predatory pricing

In deciding whether to manufacture a part or buy it from an outside vendor,which of the following represents a cost that is not relevant to the short-run decision?

Which of the following is a method of managing purchasing,production,and sales,by which the firm attempts to produce each item only as needed for the next step in the production process?

Which product pricing factor is primarily used by the majority of Japanese,Irish,and English companies?

With just-in-time inventory,what does a firm attempt to do?

During the joint production process,the costs incurred up to the splitoff point are known as which of the following?

The theory of constraints focuses on which of the following?

Which product pricing practice is used by the majority of Japanese companies in assembly-type operations (e.g.electronics and automobiles)?

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Allocating Costs to Responsibility Centers

Filters