Exam 7: Differential Cost Analysis for Operating Decisions

ABC Company has three products that use common facilities.The relevant data concerning these three products follows: Fixed costs are allocated common costs.If product line C is dropped,what will be the impact on operating profits?

Differential analysis focuses mostly on which of the following?

Just-in-time

The theory of constraints focuses on revenue and cost management when dealing with bottlenecks.The objective is to do the following Throughput Contribution Investments

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

The total of all the costs incurred by the activities in the value chain are

What are the costs of producing joint products and the relevant costs for decisions to sell or process further?

When can a firm justify the use of full costs for pricing decisions?

Ben's Foods has two sales offices: North and South.The company's records report the following information Management is considering dropping the North office.What will happen to operating income if North is eliminated?

Clear Sailing Lifeboats Clear Sailing Lifeboats uses 12,000 units of a certain component in production each year.Presently,this component is purchased from an outside supplier at $9.50 per unit.For some time now there has been idle capacity in the factory that could be utilized to make this component.The costs associated with manufacturing the component internally rather than buying it from the outside supplier are Refer to Clear Sailing Lifeboats.Assuming other things stay the same,at what price per unit from the outside supplier would the company be indifferent (on economic grounds)to buying or making the components?

The objective of the theory of constraints is to increase throughput contribution (sales dollars minus direct materials costs),minimize investments,and manage production by

Which of the following is an objective of inventory management?

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

A cost that changes as a result of changing activitiesor levels of activities is called which of the following?

Inventory management.Here are facts about inventory costs for Tops Shoes,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: 40 orders,50 orders,60 orders. (Tops Shoes;inventory management. )

During the joint production process,the costs incurred after the splitoff point are called

Which focuses on increasing the excess of differential revenue over differential costs when the firm faces bottlenecks?

Under United States laws,dumping occurs when

Just-in-time systems enable accountants to spend

Explain the term incremental cost.Compare and contrast incremental cost to the term variable cost.