Question 1

When inventories increase,the direct costing income statement will report lower net income than reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following should NOT be a consideration when deciding whether to make or buy a part?

Accepted Answer

A)  differential fixed costs 
B)  opportunity costs 
C)  sunk costs 
D)  capacity costs 
A)  differential fixed costs 
B)  opportunity costs 
C)  sunk costs 
D)  capacity costs

Question 3

If a decision must be made to close a warehouse,non-refundable prepaid rent on the warehouse is

Accepted Answer

A)  an opportunity cost. 
B)  a common cost. 
C)  a sunk cost. 
D)  a variable cost. 
A)  an opportunity cost. 
B)  a common cost. 
C)  a sunk cost. 
D)  a variable cost.

Question 4

Evaluation of available capacity is irrelevant when making decisions on whether to accept or reject a special order.

Accepted Answer

A) True 
 B)False

Question 5

Under ____________________ costing,a portion of fixed manufacturing overhead is deferred to future periods as part of the inventory value.

Accepted Answer

The answer of Under ____________________ costing,a portion of fixed manufacturing...

Question 6

Irrelevant costs are those that will not impact the decision maker's options and thus can be eliminated from analyses.

Accepted Answer

A) True 
 B)False

Question 7

McAdd Industries is considering whether to continue making part MPG 411 or buying the part from a supplier.The supplier can sell the needed number of parts (47,000 projected)to McAdd for an amount that is above the company's current cost to manufacture it.If McAdd decides to purchase the parts from its supplier,it will be able to reconfigure the manufacturing floor in order to allow increased production of 50 of its product for an increased contribution margin of $17,000 for the year.The old machine has a book value of $39,000,and can be sold for $4,000.
Discuss this situation.What are the considerations?

Accepted Answer

The student should mention the

Question 8

The first step in the decision-making process is to determine relevant cost and revenue data.

Accepted Answer

A) True 
 B)False

Question 9

A segment of a business probably should be discontinued if it cannot produce a(n)___________________.

Accepted Answer

The answer of A segment of a business probably should...

Question 10

If the finished goods inventory increases during the period,the reported net income will be larger under direct costing than under absorption costing.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT a consideration regarding a special order?

Accepted Answer

A)  If the company has sufficient capacity 
B)  If the special order jeopardized sales to existing customers 
C)  Federal laws regarding the price 
D)  Whether employee morale would be affected 
A)  If the company has sufficient capacity 
B)  If the special order jeopardized sales to existing customers 
C)  Federal laws regarding the price 
D)  Whether employee morale would be affected

Question 12

In its first year of operations,a company has sales of $100,000,ending finished goods inventory of $9,000,variable manufacturing costs of $50,000,and fixed manufacturing costs of $28,000 for the year.Assuming the company uses direct costing,the cost of goods sold for the year is

Accepted Answer

A)  $22,000. 
B)  $41,000. 
C)  $59,000. 
D)  $13,000. 
A)  $22,000. 
B)  $41,000. 
C)  $59,000. 
D)  $13,000.

Question 13

A cost that does not change regardless of the option selected need not be considered in the decision-making process.

Accepted Answer

A) True 
 B)False

Question 14

Which is the final step in the decision-making process?

Accepted Answer

A)  Consider appropriate nonfinancial factors 
B)  Make a decision 
C)  Identify workable alternatives 
D)  Evaluate the cost and revenue data 
A)  Consider appropriate nonfinancial factors 
B)  Make a decision 
C)  Identify workable alternatives 
D)  Evaluate the cost and revenue data

Question 15

Timkon Manufacturing has provided the following operating results for its recent operations:   Assuming beginning inventory cost per unit is not different than ending inventory cost,the value of the ending inventory under direct costing is:

Accepted Answer

A)  $40,000 
B)  $46,000 
C)  $60,000 
D)  $63,000 
A)  $40,000 
B)  $46,000 
C)  $60,000 
D)  $63,000

Question 16

Net income under variable costing will differ from reported net income under absorption costing when finished good inventory levels change.

Accepted Answer

A) True 
 B)False

Question 17

Earnings or potential benefits foregone because a certain course of action is taken are called ____________________ costs.

Accepted Answer

The answer of Earnings or potential benefits foregone because a...

Question 18

In its first year of operations,a company has sales of $100,000,ending finished goods inventory of $9,000,variable manufacturing costs of $50,000,and fixed manufacturing costs of $28,000 for the year.Assuming the company uses direct costing,the manufacturing margin for the year is

Accepted Answer

A)  $22,000. 
B)  $31,000. 
C)  $59,000. 
D)  $13,000. 
A)  $22,000. 
B)  $31,000. 
C)  $59,000. 
D)  $13,000.

Question 19

Which of the following is NOT a step in the decision-making process?

Accepted Answer

A)  Explore workable alternatives 
B)  Determine relevant cost and revenue data 
C)  Consider appropriate nonfinancial factors 
D)  Make a decision 
A)  Explore workable alternatives 
B)  Determine relevant cost and revenue data 
C)  Consider appropriate nonfinancial factors 
D)  Make a decision

Question 20

Which inventory costing system is required by GAAP for financial reporting purposes?

Accepted Answer

A)  direct costing 
B)  absorption costing 
C)  standard costing 
D)  variable costing 
A)  direct costing 
B)  absorption costing 
C)  standard costing 
D)  variable costing

Exam 30: Cost-Revenue Analysis for Decision Making

When inventories increase,the direct costing income statement will report lower net income than reported under absorption costing.

Which of the following should NOT be a consideration when deciding whether to make or buy a part?

If a decision must be made to close a warehouse,non-refundable prepaid rent on the warehouse is

Evaluation of available capacity is irrelevant when making decisions on whether to accept or reject a special order.

Under ____________________ costing,a portion of fixed manufacturing overhead is deferred to future periods as part of the inventory value.

Irrelevant costs are those that will not impact the decision maker's options and thus can be eliminated from analyses.

The first step in the decision-making process is to determine relevant cost and revenue data.

A segment of a business probably should be discontinued if it cannot produce a(n)___________________.

If the finished goods inventory increases during the period,the reported net income will be larger under direct costing than under absorption costing.

Which of the following is NOT a consideration regarding a special order?

In its first year of operations,a company has sales of $100,000,ending finished goods inventory of $9,000,variable manufacturing costs of $50,000,and fixed manufacturing costs of $28,000 for the year.Assuming the company uses direct costing,the cost of goods sold for the year is

A cost that does not change regardless of the option selected need not be considered in the decision-making process.

Which is the final step in the decision-making process?

Timkon Manufacturing has provided the following operating results for its recent operations: Assuming beginning inventory cost per unit is not different than ending inventory cost,the value of the ending inventory under direct costing is:

Net income under variable costing will differ from reported net income under absorption costing when finished good inventory levels change.

Earnings or potential benefits foregone because a certain course of action is taken are called ____________________ costs.

In its first year of operations,a company has sales of $100,000,ending finished goods inventory of $9,000,variable manufacturing costs of $50,000,and fixed manufacturing costs of $28,000 for the year.Assuming the company uses direct costing,the manufacturing margin for the year is

Which of the following is NOT a step in the decision-making process?

Which inventory costing system is required by GAAP for financial reporting purposes?

Accounting: the Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and the Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analyses

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

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