Question 1

________ is purchasing goods and services from outside vendors.

Accepted Answer

A) Insourcing 
B) Outsourcing 
C) Incremental cost 
D) Full cost of product 
E) Business function cost

Question 2

In the ________ approach,managers find the optimal solution by working with coordinates of the area of feasible solution.

Accepted Answer

A) fixed method 
B) mixed method 
C) variable method 
D) simple method 
E) trial-and-error method

Question 3

Managers can identify the bottleneck operations:

Accepted Answer

A) when they identify operations with large quantities of inventory pending work. 
B) only through the identification of the operations with no inventory pending work. 
C) when they identify the inventories without build up at the assembly operation. 
D) through the avoidance of production schedules of the nonbottleneck operation. 
E) when they eliminate the contribution margin of the constrained or bottleneck resource.

Question 4

The two approaches that managers use to find the optimal solutions using linear programming are:

Accepted Answer

A) graphic method;trial-and-error method. 
B) simplex method;graphic method. 
C) trial-and-error;simplex. 
D) linear programming;simplex. 
E) simplex;objective method.

Question 5

The decisions managers make about which products to sell and in what quantities are:

Accepted Answer

A) qualitative factors. 
B) contribution margins. 
C) product-mix decisions. 
D) contribution margin per unit. 
E) computer-related operating costs.

Question 6

The book value of an old machine is irrelevant because it is a past cost.

Accepted Answer

A) True 
 B)False

Question 7

________ is the additional total revenue from an activity.

Accepted Answer

A) Incremental revenue 
B) Differential costing 
C) Make-or-buy decision 
D) Business function cost 
E) Outsourcing cost

Question 8

The manager at the Screen Saver Manufacturing manufactures screen savers.The manager continues to find ways to reduce manufacturing costs and the manager received a proposal from Entrepreneurial Consultants to rearrange the production in the upcoming year.The managerial accountant provided the following information:

Required
Compute the current and proposed information and decide whether management should accept the proposal.Which of the following decisions should management accept?

Accepted Answer

A) $138,000;Current 
B) $120,400 Proposed 
C) $118,000;Current 
D) $124,000;Proposed 
E) $180,000;Proposed

Question 9

The ________ of a linear program expresses the objective,or goal to be maximized or minimized.

Accepted Answer

A) error 
B) trial 
C) simplex 
D) optimal solution 
E) objective function

Question 10

Which of the following is not an annual operating cost?

Accepted Answer

A) Energy. 
B) Repairs. 
C) Coolant. 
D) Maintenance. 
E) Revenues.

Question 11

Past costs are historical costs,and ________.

Accepted Answer

A) constraints only 
B) make-or-buy decisions 
C) product-mix costs only 
D) irrelevant to decision making 
E) expected future revenues only

Question 12

The managers at the Wicker Basket Manufacturing Mart assemble two baskets,a standard wicker basket and a deluxe wicker basket,at a plant in Virginia Beach,Virginia.Only 200 machine hours are available daily to produce the baskets.The managerial accountant reported the following information:
  
Required
Compute the contribution margin per unit and the contribution margin percentage of each basket sold.Do you have enough information to determine which basket should be sold? Show all work.

Accepted Answer

The answer of The managers at the Wicker Basket Manufacturing...

Question 13

Sales-order costs are batch-level costs that are fixed with the number of sales orders received from customers.

Accepted Answer

A) True 
 B)False

Question 14

To determine product mix,managers maximize operating income,subject to constraints such as capacity and demand.

Accepted Answer

A) True 
 B)False

Question 15

The book value of an old machine that is no longer in use is:

Accepted Answer

A) relevant because it is a current cost. 
B) irrelevant because it is a past,or sunk cost. 
C) the original cost plus accumulated depreciation. 
D) the original cost multiplied by accumulated depreciation. 
E) the original cost divided by accumulated depreciation.

Question 16

All separable costs are incremental costs.

Accepted Answer

A) True 
 B)False

Question 17

Which desirable action that managers take to relieve bottleneck constraints of the assembly operation do managers note that the cost of poor quality at a nonbottleneck operation is the cost of materials wasted?

Accepted Answer

A) Eliminate idle time at the bottleneck operation. 
B) Shift products that are not made on the bottleneck machine to nonbottleneck machines,or to outside processing facilities. 
C) Reduce setup time and processing time at bottleneck operations. 
D) Improve the quality of parts,or products,manufactured at the bottleneck operation. 
E) Other operating costs will increase,while contribution margin will remain unchanged because bottleneck capacity of the assembly operation will not increase.

Question 18

In which step of the decision-making process are managers most likely to predict future manufacturing labor costs?

Accepted Answer

A) Step 1: Identify the Problem and Uncertainties. 
B) Step 2: Obtain Information. 
C) Step 3: Make Predictions About the Future. 
D) Step 4: Make Decisions by Choosing Among Alternatives. 
E) Step 5: Implement Decision,Evaluate Performance,and Learn.

Question 19

The manager at the Engine Testing Organization reported the following information:

Required:
What is the linear function expressing the objective for the total contribution margin (TCM)?

Accepted Answer

A) TCM = 400S + 220B 
B) TCM = 220S + 340B 
C) TCM = $900S + $1,100B 
D) TCM = $660S + $725B 
E) TCM = $280S + $475B

Question 20

Which of the following is not true about separable costs?

Accepted Answer

A) Can be sunk costs. 
B) Can be fixed costs. 
C) Can be allocated costs. 
D) Always incremental costs. 
E) not always incremental costs.

Exam 9: Decision Making and Relevant Information

________ is purchasing goods and services from outside vendors.

In the ________ approach,managers find the optimal solution by working with coordinates of the area of feasible solution.

Managers can identify the bottleneck operations:

The two approaches that managers use to find the optimal solutions using linear programming are:

The decisions managers make about which products to sell and in what quantities are:

The book value of an old machine is irrelevant because it is a past cost.

________ is the additional total revenue from an activity.

The ________ of a linear program expresses the objective,or goal to be maximized or minimized.

Which of the following is not an annual operating cost?

Past costs are historical costs,and ________.

Sales-order costs are batch-level costs that are fixed with the number of sales orders received from customers.

To determine product mix,managers maximize operating income,subject to constraints such as capacity and demand.

The book value of an old machine that is no longer in use is:

All separable costs are incremental costs.

Which desirable action that managers take to relieve bottleneck constraints of the assembly operation do managers note that the cost of poor quality at a nonbottleneck operation is the cost of materials wasted?

In which step of the decision-making process are managers most likely to predict future manufacturing labor costs?

The manager at the Engine Testing Organization reported the following information: Required: What is the linear function expressing the objective for the total contribution margin (TCM) ?

Which of the following is not true about separable costs?