Question 1

Only variable costs can be differential costs.Fixed costs can differ between alternatives as well.

Accepted Answer

A) True 
 B)False

Question 2

Miller Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows:   Common fixed expenses have been allocated equally to each of the two divisions.Miller's segment margin for the West Division is:

Accepted Answer

A) $150,000. 
B) $102,000. 
C) $30,000. 
D) $110,000. 
A) $150,000. 
B) $102,000. 
C) $30,000. 
D) $110,000.

Question 3

The differential analysis approach to pricing for special orders could lead to under-pricing in the long-run because fixed costs are not included in the analysis.In the long run fixed costs become differential and should be included.

Accepted Answer

A) True 
 B)False

Question 4

The theory of constraints focuses on maximizing throughput contribution margin while minimizing all of the following except:

Accepted Answer

A) selling expenses per unit sold. 
B) production bottlenecks. 
C) investment in buildings. 
D) investment in inventories. 
A) selling expenses per unit sold. 
B) production bottlenecks. 
C) investment in buildings. 
D) investment in inventories.

Question 5

The Axle Division of Becker Company produces axles for off-road sport vehicles.One-third of Axle's 30,000 unit output is sold to an internal division of Becker;the remainder is sold to outside customers.Axles' estimated operating profit for the year is:   The internal division has an opportunity to purchase 10,000 axles of the same quality from an outside supplier on a continuing basis.The purchase price would be $13.00.If the Axle Division is now operating at full capacity and can sell all its units to outside customers at the present selling price,what is the minimum selling price that Axle should accept from the internal division?

Accepted Answer

A) $10.00. 
B) $13.00. 
C) $15.00. 
D) $20.00. 
A) $10.00. 
B) $13.00. 
C) $15.00. 
D) $20.00.

Question 6

The following information relates to a product produced by Ashland Company:   Fixed selling costs are $1,000,000 per year.Variable selling costs of $4 per unit sold are added to cover the transportation cost.Although production capacity is 500,000 units per year,Ashland expects to produce only 400,000 units next year.The product normally sells for $40 each.A customer has offered to buy 60,000 units for $30 each.The customer will pay the transportation charge on the units purchased.If Ashland accepts the special order,the effect on income would be a:

Accepted Answer

A) $60,000 increase. 
B) $180,000 increase. 
C) $420,000 increase. 
D) $600,000 decrease. 
A) $60,000 increase. 
B) $180,000 increase. 
C) $420,000 increase. 
D) $600,000 decrease.

Question 7

Which of the following costs are not considered in a differential analysis for a make-or-buy decision?

Accepted Answer

A) Indirect materials and indirect labor if the item is purchased. 
B) Direct materials and direct labor if the item is manufactured internally. 
C) Variable overhead if the item is purchased. 
D) Fixed overhead that will continue if the item is purchaseD. 
A) Indirect materials and indirect labor if the item is purchased. 
B) Direct materials and direct labor if the item is manufactured internally. 
C) Variable overhead if the item is purchased. 
D) Fixed overhead that will continue if the item is purchaseD.

Question 8

Fixed costs are always classified as sunk costs in differential cost analysis.Fixed costs can also be differential.

Accepted Answer

A) True 
 B)False

Question 9

The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000.   The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit.If CJP accepts the offer,$4 per unit of the fixed overhead would be saved.In addition,some of CJP's facilities could be rented to a third party for $15,000 per year.At what price would CJP be indifferent to XYZ's offer?

Accepted Answer

A) $17.00. 
B) $17.50. 
C) $18.50. 
D) $19.50. 
A) $17.00. 
B) $17.50. 
C) $18.50. 
D) $19.50.

Question 10

The operations of Superior Corporation are divided into the Northrup Division and the Hawley Division.Projections for the next year are as follows:   Operating income for Superior Corporation,as a whole,if the Hawley Division were dropped would be

Accepted Answer

A) $45,000. 
B) $80,000. 
C) $100,000. 
D) $120,000. 
A) $45,000. 
B) $80,000. 
C) $100,000. 
D) $120,000.

Question 11

The practice of setting price below cost with the intent to drive competitors out of business:

Accepted Answer

A) predatory pricing. 
B) target pricing. 
C) target costing. 
D) peak-load pricing. 
A) predatory pricing. 
B) target pricing. 
C) target costing. 
D) peak-load pricing.

Question 12

The AZ Company manufactures kitchen utensils.The company is currently producing well below its full capacity.The BV Company has approached AZ with an offer to buy 20,000 utensils at $0.75 each.AZ sells its utensils wholesale for $0.85 each;the average cost per unit is $0.83,of which $0.12 is fixed costs.If AZ were to accept BV's offer,what would be the increase in AZ's operating profits?

Accepted Answer

A) $400. 
B) $800. 
C) $1,600. 
D) $2,000. 
A) $400. 
B) $800. 
C) $1,600. 
D) $2,000.

Only variable costs can be differential costs.Fixed costs can differ between alternatives as well.

Miller Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows: Common fixed expenses have been allocated equally to each of the two divisions.Miller's segment margin for the West Division is:

The differential analysis approach to pricing for special orders could lead to under-pricing in the long-run because fixed costs are not included in the analysis.In the long run fixed costs become differential and should be included.

The theory of constraints focuses on maximizing throughput contribution margin while minimizing all of the following except:

Which of the following costs are not considered in a differential analysis for a make-or-buy decision?

Fixed costs are always classified as sunk costs in differential cost analysis.Fixed costs can also be differential.

The operations of Superior Corporation are divided into the Northrup Division and the Hawley Division.Projections for the next year are as follows: Operating income for Superior Corporation,as a whole,if the Hawley Division were dropped would be

The practice of setting price below cost with the intent to drive competitors out of business:

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters

Exam 4: Fundamentals of Cost Analysis for Decision Making

Only variable costs can be differential costs.Fixed costs can differ between alternatives as well.

Miller Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows: Common fixed expenses have been allocated equally to each of the two divisions.Miller's segment margin for the West Division is:

The differential analysis approach to pricing for special orders could lead to under-pricing in the long-run because fixed costs are not included in the analysis.In the long run fixed costs become differential and should be included.

The theory of constraints focuses on maximizing throughput contribution margin while minimizing all of the following except:

Which of the following costs are not considered in a differential analysis for a make-or-buy decision?

Fixed costs are always classified as sunk costs in differential cost analysis.Fixed costs can also be differential.

The operations of Superior Corporation are divided into the Northrup Division and the Hawley Division.Projections for the next year are as follows: Operating income for Superior Corporation,as a whole,if the Hawley Division were dropped would be

The practice of setting price below cost with the intent to drive competitors out of business:

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters