Exam 11: Relevant Costs for Decision Making

Financial institutions often consider outsourcing their data processing functions internationally. Which of the following are qualitative factors that should managers consider in the decision? I $\quad$ Potential communication barriers II $\quad$ Wage costs in other country III $\quad$ Reaction of existing customers

Gordon is a manager at Wingle Low Restaurant. He is considering accepting a special order from a neighbourhood homeless shelter for 80 Christmas meals. Which of the following is a relevant qualitative factor he should consider?

Average costs are used to make decisions about keeping or dropping product or segments.

A special order occurs when an existing or new customer places a one off request for a product or service.

The general rule for special order decisions is being at least as well off after the decision as before it.

Bannatyne Ltd produces and sells sunglasses. Its managers are considering whether to outsource the task of moulding the lenses for the sunglasses to Katswiri Co. Which of the following is most likely to be a qualitative factor that managers will consider in making the decision?

A cost that has been incurred in the past and cannot be changed is a (an):

Market based methods for allocating joint costs use a proportion of the profit contribution for each main product to determine the joint cost allocation rate.

Managers should consider potential benefits from using released capacity for other purposes when making keep or drop decisions.

A company should always promote the product:

The following are steps in applying relevant analysis techniques to non-routine operating decisions. I Interpret Results II Identify Input Variables III Apply the General Rule What is the correct sequence for these steps?

General decision rules associated with outsourcing decisions assume the organisation's goal is to:

New fixed costs incurred to relax a constraint are irrelevant.