d. All of these answers are correct.
51. Feedback regarding previous actions may affect:
a. future predictions
b. implementation of the decision
c. the decision model
d. All of these answers are correct.
c. A D C B
52. Place the following steps from the five-step decision process in order:
A = Make predictions about future costs
B = Evaluate performance to provide feedback
C = Implement the decision
D = Choose an alternative
a. D C A B
b. C D A B
c. A D C B
d. D C B
b. decision model
53. The formal process of choosing between alternatives is known as a(n):
a. relevant model
b. decision model
c. alternative model
d. prediction model
b. Rearrange the production floor.
54. Ruggles Circuit Company manufactures circuit boards for other firms. Management is attempting to search for ways to reduce manufacturing labor costs and has received a proposal from a consulting company to rearrange the production floor next year. Usi
c. Evaluation and feedback
57. When using the five-step decision process, which one of the following steps should be done last?
a. Obtain information
b. Choose an alternative
c. Evaluation and feedback
d. Implementing the decision
a. Obtain information
58. When using the five-step decision process, which one of the following steps should be done first?
a. Obtain information
b. Choose an alternative
c. Evaluation and feedback
d. Implementing the decision
d. All of these answers are correct.
59. For decision making, a listing of the relevant costs:
a. will help the decision maker concentrate on the pertinent data
b. will only include future costs
c. will only include costs that differ among alternatives
d. All of these answers are correct.
d. are ignored when evaluating alternatives
60. Sunk costs:
a. are relevant
b. are differential
c. have future implications
d. are ignored when evaluating alternatives
a. sunk cost
61. A computer system installed last year is an example of a(n):
a. sunk cost
b. relevant cost
c. differential cost
d. avoidable cost
d. sunk costs
62. Costs that CANNOT be changed by any decision made now or in the future are:
a. fixed costs
b. indirect costs
c. avoidable costs
d. sunk costs
d. relevant costs
63. In evaluating different alternatives, it is useful to concentrate on:
a. variable costs
b. fixed costs
c. total costs
d. relevant costs
c. relevant costs
64. Which of the following costs always differ among future alternatives?
a. fixed costs
b. historical costs
c. relevant costs
d. variable costs
b. historical costs
65. Which of the following costs are never relevant in the decision-making process?
a. fixed costs
b. historical costs
c. relevant costs
d. variable costs
b. future revenue
68. A relevant revenue is a revenue that is a(n):
a. past revenue
b. future revenue
c. in-hand revenue
d. earned revenue
b. can be expressed in monetary terms
69. Quantitative factors:
a. include financial information, but not nonfinancial information
b. can be expressed in monetary terms
c. are always relevant when making decisions
d. include employee morale
d. include customer satisfaction
70. Qualitative factors:
a. generally are easily measured in quantitative terms
b. are generally irrelevant for decision making
c. may include either financial or nonfinancial information
d. include customer satisfaction
a. for making future predictions
71. Historical costs are helpful:
a. for making future predictions
b. for decision making
c. because they are quantitative
d. None of these answers is correct.
c. appropriate weight must be given to both quantitative and qualitative factors
72. When making decisions:
a. quantitative factors are the most important
b. qualitative factors are the most important
c. appropriate weight must be given to both quantitative and qualitative factors
d. both quantitative and qualitative factors are unimp
a. qualitative factor
73. Employee morale at Dos Santos, Inc., is very high. This type of information is known as a:
a. qualitative factor
b. quantitative factor
c. nonmeasurable factor
d. financial factor
c. quantitative factors
74. Roberto owns a small body shop. His major costs include labor, parts, and rent. In the decision-making process, these costs are considered to be:
a. fixed
b. qualitative factors
c. quantitative factors
d. variable
a. incremental revenues exceed incremental costs
75. One-time-only special orders should only be accepted if:
a. incremental revenues exceed incremental costs
b. differential revenues exceed variable costs
c. incremental revenues exceed fixed costs
d. total revenues exceed total costs
d. verify past design costs for the product
76. When deciding to accept a one-time-only special order from a wholesaler, management should do all of the following EXCEPT:
a. analyze product costs
b. consider the special order's impact on future prices of their products
c. determine whether excess c
a. incremental revenues exceed incremental costs
77. When there is excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price when:
a. incremental revenues exceed incremental costs
b. additional fixed costs must be incurred to accommodate the order
c.
c. $1,800 increase in operating profits
82. Ratzlaff Company has a current production level of 20,000 units per month. Unit costs at this level are:
Direct materials $0.25
Direct labor 0.40
Variable overhead 0.15
Fixed overhead 0.20
Marketing - fixed 0.20
Marketing/distribution - variable 0.40
d. Yes, since operating profits will most likely increase.
83. Black Tool Company has a production capacity of 1,500 units per month, but current production is only 1,250 units. The manufacturing costs are $60 per unit and marketing costs are $16 per unit. Doug Hall offers to purchase 250 units at $76 each for th
d. manufacturing overhead
87. An example of a quantitative factor for the decision-making process is:
a. customer satisfaction
b. employee morale
c. product quality
d. manufacturing overhead
c. variable costs
88. If there was limited capacity, all of the following amounts would change EXCEPT:
a. opportunity costs
b. differential costs
c. variable costs
d. the minimum acceptable price
a. business function cost
92. The sum of all the costs incurred in a particular business function (for example, marketing) is called the:
a. business function cost
b. full product cost
c. gross product cost
d. multiproduct cost
b. full product cost
93. The sum of all costs incurred in all business functions in the value chain (product design, manufacturing, marketing, and customer service, for example) is known as the:
a. business cost
b. full product cost
c. gross product cost
d. multiproduct cost
a. customer satisfaction
94. An example of a qualitative factor for the decision-making process is:
a. customer satisfaction
b. units sold
c. material cost
d. labor hours incurred
d. using total costs that separate variable and fixed components
95. Problems that should be avoided when identifying relevant costs include all of the following EXCEPT:
a. assuming all variable costs are relevant
b. assuming all fixed costs are irrelevant
c. using unit costs that do not separate variable and fixed com
a. expected future costs that differ among the alternatives
96. The BEST way to avoid misidentification of relevant costs is to focus on:
a. expected future costs that differ among the alternatives
b. historical costs
c. unit fixed costs
d. total unit costs
b. if the supplier is reliable
97. Factors used to decide whether to outsource a part include:
a. the supplier's cost of direct materials
b. if the supplier is reliable
c. the original cost of equipment currently used for production of that part
d. past design costs used to develop the
c. special machinery for the part that has no resale value
98. Relevant costs of a make-or-buy decision include all of the following EXCEPT:
a. fixed salaries that will not be incurred if the part is outsourced
b. current direct material costs of the part
c. special machinery for the part that has no resale value
d. All of these answers are correct.
99. Which of following are risks of outsourcing the production of a part?
a. unpredictable quality
b. unreliable delivery
c. unscheduled price increases
d. All of these answers are correct.
c. building close relationships with the supplier
100. Which of the following minimize the risks of outsourcing?
a. the use of short-term contracts that specify price
b. the responsibility for on-time delivery is now the responsibility of the supplier
c. building close relationships with the supplier
d.
d. differential costs are $2 per unit
101. The cost to produce Part A was $10 per unit in 20X3 and in 20X4 it has increased to $11 per unit. In 20X4, Supplier XYZ has offered to supply Part A for $9 per unit. For the make-or-buy decision:
a. incremental revenues are $2 per unit
b. incremental
b. the original cost of the production equipment
102. When evaluating a make-or-buy decision, which of the following does NOT need to be considered?
a. alternative uses of the production capacity
b. the original cost of the production equipment
c. the quality of the supplier's product
d. the reliability
a. qualitative factor
103. For make-or-buy decisions, a supplier's ability to deliver the item on a timely basis is considered a(n):
a. qualitative factor
b. relevant cost
c. differential factor
d. opportunity cost
d. fixed overhead costs
104. The incremental costs of producing one more unit of product include all of the following EXCEPT:
a. direct materials
b. direct labor
c. variable overhead costs
d. fixed overhead costs
c. $80
105. Direct materials $40, direct labor $10, variable overhead costs $30, and fixed overhead costs $20. In the short term, the incremental cost of one unit is:
a. $30
b. $50
c. $80
d. $100
d. not computing unit costs at the same output level
106. Unit cost data can MOST mislead decisions by:
a. not computing fixed overhead costs
b. computing labor and materials costs only
c. computing administrative costs
d. not computing unit costs at the same output level
b. outsourcing
107. Schmidt Sewing Company incorporates the services of Deb's Sewing. Schmidt purchases pre-cut dresses from Deb's. This is primarily known as:
a. insourcing
b. outsourcing
c. relevant costing
d. sunk costing
a. insourcing
108. Pearce Sign Company manufactures signs from direct materials to the finished product. This is considered:
a. insourcing
b. outsourcing
c. relevant costing
d. sunk costing
d. unchanged supervisory costs
109. Which of the following would NOT be considered in a make-or-buy decision?
a. fixed costs that will no longer be incurred
b. variable costs of production
c. potential rental income from space occupied by the production area
d. unchanged supervisory co
b. currently used manufacturing capacity that has alternative uses
115. Relevant costs in a make-or-buy decision of a part include:
a. setup overhead for the manufacture of the product using the outsourced part
b. currently used manufacturing capacity that has alternative uses
c. annual plant insurance costs that will re
c. opportunity cost
116. If Horsley Corporation doesn't use one of its limited resources in the best possible way, the lost contribution to income could be called a(n):
a. variable cost
b. fixed cost
c. opportunity cost
d. sunk cost
c. greater
117. When a firm has constrained capacity as opposed to surplus capacity, opportunity costs will be:
a. lower
b. the same
c. greater
d. variable
b. only are considered when selecting among alternatives
118. Opportunity costs:
a. result in a cash outlay
b. only are considered when selecting among alternatives
c. are recorded in the accounting records
d. should be maximized for the best decision
a. of a resource with excess capacity is zero
119. Opportunity cost(s):
a. of a resource with excess capacity is zero
b. should be maximized by organizations
c. are recorded as an expense in the accounting records
d. are most important to financial accountants
b. incremental costs plus opportunity costs
120. For make-or-buy decisions, relevant costs include:
a. direct material costs plus direct labor costs
b. incremental costs plus opportunity costs
c. differential costs plus fixed costs
d. incremental costs plus differential costs
a. the interest forgone on an alternative investment
121. The opportunity cost of holding significant inventory includes:
a. the interest forgone on an alternative investment
b. additional insurance costs
c. additional storage costs
d. All of these answers are correct.
b. $4,800
124. A recent college graduate has the choice of buying a new auto for $20,000 or investing the money for four years with a 6% expected annual rate of return. If the graduate decides to purchase the auto, the BEST estimate of the opportunity cost of that
a. 0
125. A supplier offers to make Part A for $70. Jansen Company has relevant costs of $80 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is:
a. 0
b. $10,000
c. $70,000
d. indeterminable
d. indeterminable
126. Jensen Company has relevant costs of $80 per unit to manufacture Part A. A current supplier offers to make Part A for $70 per unit. If capacity is constrained, the opportunity cost of buying Part A from the supplier is:
a. 0
b. $10,000
c. $70,000
d.
c. a product-mix decision
127. Determining which products should be produced when the plant is operating at full capacity is referred to as:
a. an outsourcing analysis
b. production scheduling analysis
c. a product-mix decision
d. a short-run focus decision
b. help determine how to maximize operating profits
128. Product mix decisions:
a. have a long-run focus
b. help determine how to maximize operating profits
c. focus on selling price per unit
d. All of these answers are correct.
d. All of these answers are correct.
129. Constraints may include:
a. the availability of direct materials in manufacturing
b. linear square feet of display space for a retailer
c. direct labor in the service industry
d. All of these answers are correct.
b. corporate office costs allocated to each product
130. For determining the best mix of products, the one with the LEAST amount of influence is:
a. the market price of the products
b. corporate office costs allocated to each product
c. the use of capacity resources
d. contribution margins
a. always focus on maximizing total contribution margin
131. In product-mix decisions:
a. always focus on maximizing total contribution margin
b. focus on the product with the greatest contribution margin per machine-hour
c. focus on the full costs of the product
d. never focus on the short-term, but include o
c. how total costs differ among alternatives
143. When deciding whether to discontinue a segment of a business, managers should focus on:
a. equipment used by that segment that could become idle
b. reallocation of corporate costs
c. how total costs differ among alternatives
d. operating income per u
d. future administrative costs that will continue
144. When deciding whether to discontinue a segment of a business, relevant costs include all of the following EXCEPT:
a. fixed supervision costs that can be eliminated
b. variable marketing costs per unit of product sold
c. cost of goods sold
d. future a
a. if the resources no longer required by the discontinued product can be eliminated
145. Discontinuing unprofitable products will increase profitability:
a. if the resources no longer required by the discontinued product can be eliminated
b. if capacity constraints are adjusted
c. automatically
d. when a large portion of the fixed costs
c. differ across the alternatives being considered
153. Costs are relevant to a particular decision if they:
a. are variable costs
b. are fixed costs
c. differ across the alternatives being considered
d. remain unchanged across the alternatives being considered
a. $50,000 cost of the old machine
154. When deciding to lease a new cutting machine or continue using the old machine, the following costs are relevant EXCEPT the:
a. $50,000 cost of the old machine
b. $20,000 cost of the new machine
c. $10,000 selling price of the old machine
d. $3,000 a
a. not relevant
155. For machine-replacement decisions, depreciation is a cost that is:
a. not relevant
b. differential
c. incremental
d. variable
c. book value
162. The difference between the original cost of an asset and the accumulated depreciation is known as the:
a. historical cost
b. market value
c. book value
d. depreciable cost
c. the measures used in the performance evaluation model
163. Managers tend to favor the alternative that makes their performance look best. Therefore, they tend to focus on:
a. how to implement the chosen alternative
b. the measures used in the decision model
c. the measures used in the performance evaluation
b. performance evaluation model
164. If management takes a multiple-year view in the decision model and judges success according to the current year's results, a problem will occur in the:
a. decision model
b. performance evaluation model
c. production evaluation model
d. quantitative m
d. not consistent with the decision model
165. Top management faces a persistent challenge to make sure that the performance evaluation model of lower level managers is:
a. focused on short-term performance
b. based solely on quantitative factors
c. consistent with the decision model
d. not consi
d. determining the relevant and irrelevant costs
166. The three steps involved in linear programming include all of the following EXCEPT:
a. determining the objective
b. determining the basic relationship
c. computing the optimal solution
d. determining the relevant and irrelevant costs
a. an objective function
167. In linear programming, the goals of management are expressed in:
a. an objective function
b. constraints
c. operating policies
d. business functions
b. constraint
168. A mathematical inequality or equality that must be appeased is known as a(n):
a. objective function
b. constraint
c. operating policy
d. business function