Question 1

Describe how to use differential analysis to measure customer profitability.

Accepted Answer

Customer profitability is determined usi

Question 2

Which of the following is the objective of the theory of constraints?

Accepted Answer

A) maximize throughput contribution while maximizing investments and operating costs. 
B) minimizing throughput contribution while minimizing investments and operating costs. 
C) minimizing throughput contribution while maximizing investments and operating costs. 
D) maximize throughput contribution while minimizing investments and operating costs. 
A) maximize throughput contribution while maximizing investments and operating costs. 
B) minimizing throughput contribution while minimizing investments and operating costs. 
C) minimizing throughput contribution while maximizing investments and operating costs. 
D) maximize throughput contribution while minimizing investments and operating costs.

Question 3

How do customers influence pricing decisions?

Accepted Answer

A) By substituting a more expensive product. 
B) By using credit cards instead of cash. 
C) By substituting a less expensive product. 
D) None of the answers is correct. 
A) By substituting a more expensive product. 
B) By using credit cards instead of cash. 
C) By substituting a less expensive product. 
D) None of the answers is correct.

Question 4

Which statement is true concerning flexible manufacturing systems?

Accepted Answer

A) Although costs are saved,flexible manufacturing systems increase the amount of time it takes to make changeovers. 
B) These systems require that accountants spend an increased amount of time on inventory valuation for external reporting. 
C) These systems enhance a firm's ability to utilize just-in-time. 
D) All of the answers are correct. 
A) Although costs are saved,flexible manufacturing systems increase the amount of time it takes to make changeovers. 
B) These systems require that accountants spend an increased amount of time on inventory valuation for external reporting. 
C) These systems enhance a firm's ability to utilize just-in-time. 
D) All of the answers are correct.

Question 5

Why is differential analysis considered to be an extension of financial modeling which focuses on cash flows?

Accepted Answer

A) Cash is the medium of exchange. 
B) Cash serves as a common,objective measure of the benefits of alternatives. 
C) Cash serves as a common,objective measure of the costs of alternatives. 
D) All of the answers are correct. 
A) Cash is the medium of exchange. 
B) Cash serves as a common,objective measure of the benefits of alternatives. 
C) Cash serves as a common,objective measure of the costs of alternatives. 
D) All of the answers are correct.

Question 6

Which of the following is true about short-run and long-run pricing decisions?

Accepted Answer

A) Short-run decisions include pricing for a special order with no long-term implications. 
B) Short-run decisions typically have a time horizon of two years or more. 
C) Short-run decisions include pricing a main product in a major market. 
D) Long-run decisions include pricing for a special order with no short-term implications. 
A) Short-run decisions include pricing for a special order with no long-term implications. 
B) Short-run decisions typically have a time horizon of two years or more. 
C) Short-run decisions include pricing a main product in a major market. 
D) Long-run decisions include pricing for a special order with no short-term implications.

Question 7

Which of the following qualitative factors favors the buy choice in a make or buy decision?

Accepted Answer

A) Maintaining a long-run relationship with suppliers 
B) The utilization of idle capacity 
C) Quality control is critical. 
D) All of the answers are correct. 
A) Maintaining a long-run relationship with suppliers 
B) The utilization of idle capacity 
C) Quality control is critical. 
D) All of the answers are correct.

Question 8

Target costs equal which of the following?

Accepted Answer

A) target prices minus target profits. 
B) fixed costs plus variable costs. 
C) prime costs plus conversion costs. 
D) opportunity cost plus cost of capital. 
A) target prices minus target profits. 
B) fixed costs plus variable costs. 
C) prime costs plus conversion costs. 
D) opportunity cost plus cost of capital.

Question 9

Relevant costs for decisions to sell or process further include

Accepted Answer

A) joint costs. 
B) additional processing costs. 
C) fixed costs. 
D) sunk costs. 
A) joint costs. 
B) additional processing costs. 
C) fixed costs. 
D) sunk costs.

Question 10

Inventory management.Here are facts about inventory costs for Winston Wines,a retailer:
   
Required:
Prepare a table like Exhibit 7.14 in the text.Find the costs of ordering and carrying inventory for each of the following number of annual orders: 20 orders,30 orders,40 orders.
(Winston Wines;inventory management. )

Accepted Answer

@#IMG-DLM&_TB2144_00 (a)60,000 units/num

Question 11

In producing joint products,which are the relevant costs for decisions to sell or process further?

Accepted Answer

A) Costs incurred up to the splitoff point 
B) Costs incurred after the splitoff point 
C) Joint costs 
D) Sunk costs 
A) Costs incurred up to the splitoff point 
B) Costs incurred after the splitoff point 
C) Joint costs 
D) Sunk costs

Question 12

Short-run decisions include pricing for a special order with no long-term implications.Typically the time horizon is

Accepted Answer

A) six months or less. 
B) over six months but less than a year. 
C) one to two years. 
D) over two years. 
A) six months or less. 
B) over six months but less than a year. 
C) one to two years. 
D) over two years.

Question 13

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

Accepted Answer

A) supply-push. 
B) just-in-time. 
C) demand-push. 
D) economic order quantity. 
A) supply-push. 
B) just-in-time. 
C) demand-push. 
D) economic order quantity.

Question 14

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

Accepted Answer

A) promoting the product. 
B) conducting a campaign to win back lost customers. 
C) running advertising campaigns. 
D) All of the answers are correct. 
A) promoting the product. 
B) conducting a campaign to win back lost customers. 
C) running advertising campaigns. 
D) All of the answers are correct.

Question 15

When can using full costs for pricing decisions be justified?

Accepted Answer

A) when a firm enters into a short term contractual relationship to supply a product. 
B) for development and production of customized products and contracts with the government. 
C) when managers initially set prices to cover development costs and then adjust to reflect market conditions. 
D) for development and production of standardized commercial products. 
A) when a firm enters into a short term contractual relationship to supply a product. 
B) for development and production of customized products and contracts with the government. 
C) when managers initially set prices to cover development costs and then adjust to reflect market conditions. 
D) for development and production of standardized commercial products.

Question 16

The short-run differential costs of a product are $25.Fixed costs are $5 per unit based on 10,000 units produced during this period.The company has adequate capacity to accept a special order of 1,000 units.What is the minimum price that could be charged using the differential approach to pricing?

Accepted Answer

A) $ 5.00 
B) $20.00 
C) $25.00 
D) $30.00 
A) $ 5.00 
B) $20.00 
C) $25.00 
D) $30.00

Question 17

In the long run,the practice of setting price so that it must at least equal the differential cost of producing and selling the product will cover all costs because

Accepted Answer

A) fixed costs are differential in the long run. 
B) variable costs are differential in the long run. 
C) fixed and variable costs are differential in the long run. 
D) fixed and variable costs are discretionary in the long run. 
A) fixed costs are differential in the long run. 
B) variable costs are differential in the long run. 
C) fixed and variable costs are differential in the long run. 
D) fixed and variable costs are discretionary in the long run.

Question 18

On which of the following factors should the decision to drop a product line should be based?

Accepted Answer

A) the fact that the product line shows a net loss over several periods. 
B) the ability of the firm to eliminate some fixed costs as a result of dropping the product. 
C) whether the fixed costs that can be avoided by dropping the product line are less than the contribution margin that will be lost. 
D) whether the fixed costs that can be avoided by dropping the product line are greater than the contribution margin lost. 
A) the fact that the product line shows a net loss over several periods. 
B) the ability of the firm to eliminate some fixed costs as a result of dropping the product. 
C) whether the fixed costs that can be avoided by dropping the product line are less than the contribution margin that will be lost. 
D) whether the fixed costs that can be avoided by dropping the product line are greater than the contribution margin lost.

Question 19

Which of the following statements is true when there is only one scarce resource?

Accepted Answer

A) Choose the product that gives the largest contribution per unit of the scarce resource used. 
B) Choose the product that gives the smallest contribution per unit of the scarce resource used. 
C) Choose the product that gives the largest contribution per unit of all of the resources used. 
D) Choose the product that gives the smallest contribution per unit of all of the resources used. 
A) Choose the product that gives the largest contribution per unit of the scarce resource used. 
B) Choose the product that gives the smallest contribution per unit of the scarce resource used. 
C) Choose the product that gives the largest contribution per unit of all of the resources used. 
D) Choose the product that gives the smallest contribution per unit of all of the resources used.

Question 20

In considering a special order that will enable a company to make use of presently idle capacity,which of the following costs would be irrelevant?

Accepted Answer

A) Materials 
B) Depreciation 
C) Direct Labor 
D) Variable Overhead 
A) Materials 
B) Depreciation 
C) Direct Labor 
D) Variable Overhead

Describe how to use differential analysis to measure customer profitability.

Which of the following is the objective of the theory of constraints?

How do customers influence pricing decisions?

Which statement is true concerning flexible manufacturing systems?

Why is differential analysis considered to be an extension of financial modeling which focuses on cash flows?

Which of the following is true about short-run and long-run pricing decisions?

Which of the following qualitative factors favors the buy choice in a make or buy decision?

Target costs equal which of the following?

Relevant costs for decisions to sell or process further include

In producing joint products,which are the relevant costs for decisions to sell or process further?

Short-run decisions include pricing for a special order with no long-term implications.Typically the time horizon is

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

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

When can using full costs for pricing decisions be justified?

The short-run differential costs of a product are $25.Fixed costs are $5 per unit based on 10,000 units produced during this period.The company has adequate capacity to accept a special order of 1,000 units.What is the minimum price that could be charged using the differential approach to pricing?

In the long run,the practice of setting price so that it must at least equal the differential cost of producing and selling the product will cover all costs because

On which of the following factors should the decision to drop a product line should be based?

Which of the following statements is true when there is only one scarce resource?

In considering a special order that will enable a company to make use of presently idle capacity,which of the following costs would be irrelevant?

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

Describe how to use differential analysis to measure customer profitability.

Which of the following is the objective of the theory of constraints?

How do customers influence pricing decisions?

Which statement is true concerning flexible manufacturing systems?

Why is differential analysis considered to be an extension of financial modeling which focuses on cash flows?

Which of the following is true about short-run and long-run pricing decisions?

Which of the following qualitative factors favors the buy choice in a make or buy decision?

Target costs equal which of the following?

Relevant costs for decisions to sell or process further include

In producing joint products,which are the relevant costs for decisions to sell or process further?

Short-run decisions include pricing for a special order with no long-term implications.Typically the time horizon is

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

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

When can using full costs for pricing decisions be justified?

The short-run differential costs of a product are $25.Fixed costs are $5 per unit based on 10,000 units produced during this period.The company has adequate capacity to accept a special order of 1,000 units.What is the minimum price that could be charged using the differential approach to pricing?

In the long run,the practice of setting price so that it must at least equal the differential cost of producing and selling the product will cover all costs because

On which of the following factors should the decision to drop a product line should be based?

Which of the following statements is true when there is only one scarce resource?

In considering a special order that will enable a company to make use of presently idle capacity,which of the following costs would be irrelevant?

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