Question 1

Information is relevant in business decisions if it is a(n)________.

Accepted Answer

A) expected future cost or it differs among alternatives 
B) expected future cost and it differs among alternatives 
C) historical cost and it differs among alternatives 
D) expected future cost that differs from a past cost

Question 2

Discriminatory pricing is the act of charging different prices to different customers for the same product or service.

Accepted Answer

A) True 
 B)False

Question 3

With perfect competition and a fixed set of production facilities,the marginal cost often increases as production increases up to a point because of efficiencies created by larger amounts.

Accepted Answer

A) True 
 B)False

Question 4

With increased global competition in many industries,companies are increasingly limited in influencing product prices.

Accepted Answer

A) True 
 B)False

Question 5

Overcapacity is some countries often causes aggressive pricing policies,particularly for a company's imported goods.

Accepted Answer

A) True 
 B)False

Question 6

Accountants are sometimes forced to trade relevant information for accurate information.

Accepted Answer

A) True 
 B)False

Question 7

Target costing is most effective at reducing costs if used during the product design phase.

Accepted Answer

A) True 
 B)False

Question 8

In perfect competition,the profit-maximizing volume is the quantity at which the difference between the sales price and marginal cost is at its greatest.

Accepted Answer

A) True 
 B)False

Question 9

Cougar Company is trying to decide which product to manufacture.Expected direct materials costs are $4 for each product.In choosing between the two products,the direct materials costs are ________.

Accepted Answer

A) relevant because it is an expected future cost 
B) relevant because it is a product cost 
C) irrelevant because it is an estimated cost 
D) irrelevant because it does not differ between the two alternatives

Question 10

Full cost means the total of all variable manufacturing costs and all fixed manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 11

In the decision process,predictions obtained from the accounting system and other sources become ________.

Accepted Answer

A) inputs to a business evaluation of a decision 
B) inputs to implementation of a decision 
C) feedback 
D) inputs to a decision model

Question 12

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 appliances.There is sufficient capacity available for the special order.What is relevant information for the decision whether to accept or reject the special order?

Accepted Answer

A) the cost of the parts for the 1,750 appliances 
B) the supervisor's salary 
C) the depreciation on assembly equipment 
D) the accountant's salary

Question 13

Which item is usually NOT important to special order decisions?

Accepted Answer

A) affect of special order on regular business 
B) whether idle capacity is available 
C) antitrust issues concerning price discrimination 
D) all are important

Question 14

Federer Company has budgeted the following costs for the production of its only product:  Federer Company has a target profit of $50,000.What is the average target markup percentage for setting prices as a percentage of total variable costs?

Accepted Answer

A) 38% 
B) 63% 
C) 79% 
D) 158%

Question 15

________ is the predicted future costs and revenues that will differ among alternative courses of action.

Accepted Answer

A) Relevant information 
B) Sunk costs 
C) Predictable information 
D) Target pricing

Question 16

What are the qualitative aspects of a decision?

Accepted Answer

A) those for which measurement in dollars and cents is difficult and imprecise 
B) those with a definite dollar value 
C) those with a cost figure 
D) those which are never relevant to a decision

Question 17

Historical or past information can have an indirect bearing on a decision because ________.

Accepted Answer

A) the past can be changed 
B) it can help predict the future 
C) past decisions are always good decisions 
D) none of the above

Question 18

Arizona Company has the following data about its only product:   Arizona Company uses the contribution approach.What is the operating income?

Accepted Answer

A) $2,060,000 
B) $2,120,000 
C) $2,240,000 
D) $2,970,000

Question 19

Managers can usually compute the change in total costs by multiplying any change in volume by the full unit cost.

Accepted Answer

A) True 
 B)False

Question 20

Colbert Company has the following information about its only product:
   Required: 
A)Prepare an income statement using the contribution approach.
B)Prepare an income statement using the absorption approach.

Accepted Answer

The answer of Colbert Company has the following information about...

Exam 5: Relevant Information for Decision Making With a Focus

Information is relevant in business decisions if it is a(n) ________.

Discriminatory pricing is the act of charging different prices to different customers for the same product or service.

With perfect competition and a fixed set of production facilities,the marginal cost often increases as production increases up to a point because of efficiencies created by larger amounts.

With increased global competition in many industries,companies are increasingly limited in influencing product prices.

Overcapacity is some countries often causes aggressive pricing policies,particularly for a company's imported goods.

Accountants are sometimes forced to trade relevant information for accurate information.

Target costing is most effective at reducing costs if used during the product design phase.

In perfect competition,the profit-maximizing volume is the quantity at which the difference between the sales price and marginal cost is at its greatest.

Cougar Company is trying to decide which product to manufacture.Expected direct materials costs are $4 for each product.In choosing between the two products,the direct materials costs are ________.

Full cost means the total of all variable manufacturing costs and all fixed manufacturing costs.

In the decision process,predictions obtained from the accounting system and other sources become ________.

A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 appliances.There is sufficient capacity available for the special order.What is relevant information for the decision whether to accept or reject the special order?

Which item is usually NOT important to special order decisions?

Federer Company has budgeted the following costs for the production of its only product: Federer Company has a target profit of $50,000.What is the average target markup percentage for setting prices as a percentage of total variable costs?

________ is the predicted future costs and revenues that will differ among alternative courses of action.

What are the qualitative aspects of a decision?

Historical or past information can have an indirect bearing on a decision because ________.

Arizona Company has the following data about its only product: Arizona Company uses the contribution approach.What is the operating income?

Managers can usually compute the change in total costs by multiplying any change in volume by the full unit cost.

Colbert Company has the following information about its only product: Required: A)Prepare an income statement using the contribution approach. B)Prepare an income statement using the absorption approach.