Question 1

Which statement is true concerning long-run decisions?

Accepted Answer

A) Long-run decisions include pricing a minor product in a minor market. 
B) Long-run decisions include pricing a minor product in a major market. 
C) Long-run decisions include pricing a main product in a minor market. 
D) Long-run decisions include pricing a main product in a major market. 
A) Long-run decisions include pricing a minor product in a minor market. 
B) Long-run decisions include pricing a minor product in a major market. 
C) Long-run decisions include pricing a main product in a minor market. 
D) Long-run decisions include pricing a main product in a major market.

Question 2

The economic order quantity model is used to

Accepted Answer

A) set the target cost. 
B) set the target profit. 
C) set the target sales price. 
D) derive the optimal number of orders or production runs. 
A) set the target cost. 
B) set the target profit. 
C) set the target sales price. 
D) derive the optimal number of orders or production runs.

Question 3

Explain how to base target costs on target prices.

Accepted Answer

Target pricing is based on cus

Question 4

What is the objective of value engineering?

Accepted Answer

A) to increase quality in order to satisfy customer needs. 
B) to reduce quality while satisfying customer needs. 
C) to increase profits while satisfying customer needs. 
D) to reduce costs while satisfying customer needs. 
A) to increase quality in order to satisfy customer needs. 
B) to reduce quality while satisfying customer needs. 
C) to increase profits while satisfying customer needs. 
D) to reduce costs while satisfying customer needs.

Question 5

Dropping a product line.Sparkle Products,a Christmas ornament 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 Sparkle Products drop? (Hint: Compute the contribution per machine hour because machine time is the constraint. )
(Sparkle Products;dropping a product line. )

Accepted Answer

@#IMG-DLM&_TB2144_00 (a)$30 = $12/0.4 ho

Question 6

A company makes two products.The company can sell all of either product it can make.The relevant data for these two products follows:
 
Total fixed overhead is $250,000.The company has 100,000 machine hours available for production.The company should select which product to maximize operating profits?

Accepted Answer

A) Product A because it uses less machine time. 
B) Product A because its contribution margin per machine hour is $5.00. 
C) Product B because its contribution margin per unit is $10. 
D) Product B because its contribution margin per machine hour is $6.67. 
A) Product A because it uses less machine time. 
B) Product A because its contribution margin per machine hour is $5.00. 
C) Product B because its contribution margin per unit is $10. 
D) Product B because its contribution margin per machine hour is $6.67.

Question 7

The optimal number of units to order or produce is the economic order quantity,which is the optimal trade-off between which of the following?

Accepted Answer

A) controllable and non-controllable costs. 
B) fixed costs and variable costs. 
C) setup (or order)costs and carrying costs. 
D) sunk and opportunity costs. 
A) controllable and non-controllable costs. 
B) fixed costs and variable costs. 
C) setup (or order)costs and carrying costs. 
D) sunk and opportunity costs.

Question 8

The economic order quantity is the square root of 2 times

Accepted Answer

A) the demand for the period divided by the cost of carrying one unit in inventory for the period. 
B) order set up cost divided by the cost of carrying one unit in inventory for the period. 
C) the cost of carrying one unit in inventory for the period divided by the order set up cost. 
D) order set up cost times the demand for the period divided by the cost of carrying one unit in inventory for the period. 
A) the demand for the period divided by the cost of carrying one unit in inventory for the period. 
B) order set up cost divided by the cost of carrying one unit in inventory for the period. 
C) the cost of carrying one unit in inventory for the period divided by the order set up cost. 
D) order set up cost times the demand for the period divided by the cost of carrying one unit in inventory for the period.

Question 9

Which of the following would be a means of dealing with a production bottleneck?

Accepted Answer

A) Reduce the number of units produced by the machine or process constituting the bottleneck. 
B) Reduce the number of workers assigned to bottleneck machines or processes. 
C) Increase the number of workers assigned to bottleneck machines or processes. 
D) Reduce the number of defective units produced by the machine or process constituting the bottleneck. 
A) Reduce the number of units produced by the machine or process constituting the bottleneck. 
B) Reduce the number of workers assigned to bottleneck machines or processes. 
C) Increase the number of workers assigned to bottleneck machines or processes. 
D) Reduce the number of defective units produced by the machine or process constituting the bottleneck.

Question 10

The optimal solution to a linear programming problem will always be which of the following?

Accepted Answer

A) on the horizontal axis of the graph of a linear programming problem. 
B) on the vertical axis of the graph of a linear programming problem. 
C) on a corner of the feasible production area of the graph of a linear programming problem. 
D) at the origin of the graph of a linear programming problem. 
A) on the horizontal axis of the graph of a linear programming problem. 
B) on the vertical axis of the graph of a linear programming problem. 
C) on a corner of the feasible production area of the graph of a linear programming problem. 
D) at the origin of the graph of a linear programming problem.

Question 11

How does linear programming optimize the use of scarce resources?

Accepted Answer

A) by finding the product mix that will maximize profits given the constraints. 
B) by providing opportunity costs of constraints. 
C) by allowing for sensitivity analysis. 
D) All of the answers are correct. 
A) by finding the product mix that will maximize profits given the constraints. 
B) by providing opportunity costs of constraints. 
C) by allowing for sensitivity analysis. 
D) All of the answers are correct.

Question 12

The Fast Trax Company manufactures adding machines.The company's capacity is 5,000 units per month;however,it currently is selling only 3,000 units per month.Company X has asked Fast Trax to sell 1,000 adding machines at $25 each.Normally,Fast Trax sells its product for $35.The company records report each adding machine's full absorption costs are $30 which includes fixed costs of $20.If Fast Trax was to accept Company X's offer,what would be the impact on Fast Trax's operating income?

Accepted Answer

A) Additional profit of $15,000 
B) Additional profit of $25,000 
C) A loss of $5,000 on this order 
D) A loss of $10,000 on this order 
A) Additional profit of $15,000 
B) Additional profit of $25,000 
C) A loss of $5,000 on this order 
D) A loss of $10,000 on this order

Question 13

Which of the following statements regarding joint cost allocation is not true?

Accepted Answer

A) The sales value of the end products is the most common method used to allocate joint costs. 
B) Inventory cost and cost of goods sold computations for internal reporting purposes require joint cost allocation. 
C) Inventory cost and cost of goods sold computations for external reporting purposes require joint cost allocation. 
D) Joint cost allocation is unnecessary in deciding to sell or process further beyond the split-off point. 
A) The sales value of the end products is the most common method used to allocate joint costs. 
B) Inventory cost and cost of goods sold computations for internal reporting purposes require joint cost allocation. 
C) Inventory cost and cost of goods sold computations for external reporting purposes require joint cost allocation. 
D) Joint cost allocation is unnecessary in deciding to sell or process further beyond the split-off point.

Question 14

Which of the following optimizes the use of scarce resources?

Accepted Answer

A) Total quality management 
B) Linear programming 
C) Just-in-time inventory 
D) The economic order quantity 
A) Total quality management 
B) Linear programming 
C) Just-in-time inventory 
D) The economic order quantity

Question 15

Just-in-time inventory is a method of managing purchasing,production,and sales,by which

Accepted Answer

A) the firm attempts to produce each item only as needed for the next step in the production process. 
B) the firm attempts to time purchases so that items arrive just in time for sale or production. 
C) the firm attempts to produce each item only as needed for the next step in the production process,and the firm attempts to time purchases so that items arrive just in time for sale or production. 
D) None of the answers is correct. 
A) the firm attempts to produce each item only as needed for the next step in the production process. 
B) the firm attempts to time purchases so that items arrive just in time for sale or production. 
C) the firm attempts to produce each item only as needed for the next step in the production process,and the firm attempts to time purchases so that items arrive just in time for sale or production. 
D) None of the answers is correct.

Question 16

Explain how linear programming optimizes the use of scarce resources.

Accepted Answer

Linear programming (a)finds th

Question 17

When can using full costs for pricing decisions be justified?

Accepted Answer

A) when a firm enters into a long-term contractual relationship to supply a product. 
B) when a firm enters into a short-term contractual relationship to supply a product. 
C) for development and production of standardized commercial products. 
D) when setting short-term market prices. 
A) when a firm enters into a long-term contractual relationship to supply a product. 
B) when a firm enters into a short-term contractual relationship to supply a product. 
C) for development and production of standardized commercial products. 
D) when setting short-term market prices.

Question 18

Which of the following statements is correct?

Accepted Answer

A) The theory of constraints focuses on revenue and cost management when dealing with bottlenecks. 
B) The theory of constraints decreases throughput contribution (sales dollars minus direct material costs). 
C) The theory of constraints maximizes investments. 
D) The theory of constraints manages production by letting non-constrained activities set the pace for the rest of operations. 
A) The theory of constraints focuses on revenue and cost management when dealing with bottlenecks. 
B) The theory of constraints decreases throughput contribution (sales dollars minus direct material costs). 
C) The theory of constraints maximizes investments. 
D) The theory of constraints manages production by letting non-constrained activities set the pace for the rest of operations.

Question 19

The use of total quality management and flexible manufacturing practices to reduce setup costs enhances a company's ability to use

Accepted Answer

A) economic order quantity methods. 
B) just-in-time inventory methods. 
C) first-in,first-out inventory methods. 
D) last-in,last-out inventory methods. 
A) economic order quantity methods. 
B) just-in-time inventory methods. 
C) first-in,first-out inventory methods. 
D) last-in,last-out inventory methods.

Question 20

Which statement is true concerning linear programming?

Accepted Answer

A) Linear programming will find the product mix that will maximize profits given the constraints. 
B) Linear programming does not provide opportunity costs of constraints. 
C) Linear programming does not allow for sensitivity analysis. 
D) Linear programming cannot find the product mix that will maximize profits given the constraints. 
A) Linear programming will find the product mix that will maximize profits given the constraints. 
B) Linear programming does not provide opportunity costs of constraints. 
C) Linear programming does not allow for sensitivity analysis. 
D) Linear programming cannot find the product mix that will maximize profits given the constraints.

Which statement is true concerning long-run decisions?

The economic order quantity model is used to

Explain how to base target costs on target prices.

What is the objective of value engineering?

A company makes two products.The company can sell all of either product it can make.The relevant data for these two products follows: Total fixed overhead is $250,000.The company has 100,000 machine hours available for production.The company should select which product to maximize operating profits?

The optimal number of units to order or produce is the economic order quantity,which is the optimal trade-off between which of the following?

The economic order quantity is the square root of 2 times

Which of the following would be a means of dealing with a production bottleneck?

The optimal solution to a linear programming problem will always be which of the following?

How does linear programming optimize the use of scarce resources?

Which of the following statements regarding joint cost allocation is not true?

Which of the following optimizes the use of scarce resources?

Just-in-time inventory is a method of managing purchasing,production,and sales,by which

Explain how linear programming optimizes the use of scarce resources.

When can using full costs for pricing decisions be justified?

Which of the following statements is correct?

The use of total quality management and flexible manufacturing practices to reduce setup costs enhances a company's ability to use

Which statement is true concerning linear programming?

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 statement is true concerning long-run decisions?

The economic order quantity model is used to

Explain how to base target costs on target prices.

What is the objective of value engineering?

The optimal number of units to order or produce is the economic order quantity,which is the optimal trade-off between which of the following?

The economic order quantity is the square root of 2 times

Which of the following would be a means of dealing with a production bottleneck?

The optimal solution to a linear programming problem will always be which of the following?

How does linear programming optimize the use of scarce resources?

Which of the following statements regarding joint cost allocation is not true?

Which of the following optimizes the use of scarce resources?

Just-in-time inventory is a method of managing purchasing,production,and sales,by which

Explain how linear programming optimizes the use of scarce resources.

When can using full costs for pricing decisions be justified?

Which of the following statements is correct?

The use of total quality management and flexible manufacturing practices to reduce setup costs enhances a company's ability to use

Which statement is true concerning linear programming?

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