Exam 7: Differential Cost Analysis for Operating Decisions

Product mix decision.The Jackson Company has one machine on which it can produce either of two products,Y or Z.Sales demand for both products is such that the machine could operate at full capacity on either of the products,and Jackson can sell all output at current prices.Product Y requires one hour of machine time per unit of output and Product Z requires two hours of machine time per unit of output.The following information summarizes the per-unit cash inflows and costs of Products Y and Z. Selling costs are the same whether Jackson produces Product Y or Z,or both;you may ignore them. Required: Should Jackson Company plan to produce Product Y,Product Z,or some mixture of both? Why? (Jackson Company;product mix decision. )

Just-in-time

The objectives of the theory of constraints include which of the following?

In the short run,the practice of setting price so that it must at least equal the differential cost of producing and selling the product will result in which of the following?

Make or buy.Towson,Inc. ,produces semiconductors of which part no.200 is a subassembly.Towson,Inc. ,currently produces part no.200 in its own shop.The Baltic Company offers to supply it at a cost of $205 per 500 units.An analysis of the costs Towson incurs producing part no.200 reveals the following information: Required: Management of Towson,Inc. ,needs your advice in answering the following questions: a.Should Towson,Inc. ,accept the offer from Baltic if Towson's plant is operating well below capacity? b.Should the offer be accepted if Baltic reduces the price to $170 per 500 units? c.Suppose Towson can find other profitable uses for the facilities that it now uses in turning out part no.200.How would that fact affect the price Towson is willing to pay Baltic? (Towson,Inc. ;make or buy. )

Explain why costs must be covered by prices.

A differential cost is a cost that changes (differs)as a result of changing which of the following?

Using activity-based costing to analyze customer profitability requires the analyst to determine the cost to maintain customers,which includes such activities as

Identify the factors underlying make-or-buy decisions.

Which of the following influences should not be considered in short-run pricing decisions?

Which of the following terms describes the systematic evaluation of all aspects of research and development,design of products and processes,production,marketing,distribution,and customer service?

How is linear programming used to optimize the use of scarce resources?

Which of the following is an example of a make-or-buy decision?

A firm facing a make-or-buy decision must decide whether to meet its needs internally or to acquire goods or services from external sources.Whether to make or buy depends on which of the following factors?

In the short run,which element is critical to product choice decisions?

The product life cycle lasts from

What kind of unit cost data is needed for external reporting and managerial decision making? External Reporting Managerial Decision Making

The objective of the theory of constraintsis to Throughput contribution investments and operating costs

Using full costs for pricing decisions can be justified in which of the following circumstances?

What is term used to describe the pricing practice in effect when a business deliberately prices below its costs in an effort to drive out competitors?