Question 1

The absorption approach emphasizes the distribution between fixed and variable costs.

Accepted Answer

A) True 
 B)False

Question 2

_____ is the additional cost resulting from producing and selling one additional unit.

Accepted Answer

A) Marginal cost 
B) Common cost 
C) Opportunity cost 
D) Markup 
A) Marginal cost 
B) Common cost 
C) Opportunity cost 
D) Markup

Question 3

_____ is not normally included in the account?ing information provided to the decision maker.

Accepted Answer

A) Consumer needs analysis 
B) Evaluation of the performance of the implemented decision 
C) Cost predictions 
D) Methods of obtaining information 
A) Consumer needs analysis 
B) Evaluation of the performance of the implemented decision 
C) Cost predictions 
D) Methods of obtaining information

Question 4

Wyoming Company provided the following information regarding its only product--skateboards. $\begin{array}{lr}
\text { Direct materials used } & \$ 270,000 \
\text { Direct labor } & 180,000 \
\text { Fixed overhead } & 130,000 \
\text { Fixed selling and administrative costs } & 150,000 \
\text { Variable overhead } & 120,000 \
\text { Variable selling and administrative } & 60,000 \
\text { Selling unit price } & 99\
\text { Units produced and sold }&30,000
\end{array}$ _____ is the difference in total product cost between the absorption approach and the contribution approach.

Accepted Answer

A) $130,000 
B) $150,000 
C) $120,000 
D) None of these answers is correct 
A) $130,000 
B) $150,000 
C) $120,000 
D) None of these answers is correct

Question 5

Value engineering is used primarily during the production stage of the value chain.

Accepted Answer

A) True 
 B)False

Question 6

Minnesota Inc.provided the following information regarding its only product--scissors: $\begin{array}{lr}
\text { Fixed manufacturing costs } & \$ 425,000 \
\text { Fixed selling and administrative costs } & 85,000 \
\text { Fixed manufacturing costs } & 72,000 \
\text { Fixed selling and administrative costs } & 80,000 \
\text { Variable manufacturing costs } & 1,030,000 \
\text { Variable selling and administrative costs } & 120,000 \
\text { Selling unit price } & 125 \
& \
\text { Units produced and sold } & 23,000
\end{array}$ Assuming there is excess capacity, the effect of accepting a special order for 1,000 units at a price of $80.00 per scissors will be _____.

Accepted Answer

A) net income would increase by $1,000 
B) net income would increase by $22,500 
C) net income would decrease by $80,000 
D) net income would decrease by $200,000 
A) net income would increase by $1,000 
B) net income would increase by $22,500 
C) net income would decrease by $80,000 
D) net income would decrease by $200,000

Question 7

Price elasticity measures the _____.

Accepted Answer

A) amount customers are willing to pay for a product or service 
B) effect of price changes on sales volume 
C) number of units a company is willing to sell 
D) amount of competition in a given industry 
A) amount customers are willing to pay for a product or service 
B) effect of price changes on sales volume 
C) number of units a company is willing to sell 
D) amount of competition in a given industry

Question 8

Qualitative aspects of information are those for which measures in dollars and cents is easy and precise.

Accepted Answer

A) True 
 B)False

Question 9

Each quarter Bluffs Company produces 30,000 units of a product that has variable costs of $70 per unit.Total fixed costs for the quarter are $990,000.A special order is received for 1,000 units at a price of $77 per unit.In deciding to accept or reject this special order, it is appropriate to consider the _____.

Accepted Answer

A) old fixed cost per unit of $33.00 
B) difference between the offered price and the variable cost per unit 
C) new fixed cost per unit of $31.94 
D) difference between the two fixed costs per unit, which is $1.06 
A) old fixed cost per unit of $33.00 
B) difference between the offered price and the variable cost per unit 
C) new fixed cost per unit of $31.94 
D) difference between the two fixed costs per unit, which is $1.06

Question 10

Fixed cost per unit of product = total fixed manufacturing costs / some selected volume level.

Accepted Answer

A) True 
 B)False

Question 11

Marketing plays a limited role in target costing.

Accepted Answer

A) True 
 B)False

Question 12

A decision model is any method used for making a choice, sometimes requiring elaborate qualitative procedures.

Accepted Answer

A) True 
 B)False

Question 13

Factors that are usually important in determining the feasibility of earning the desired target profit margin include inflation and interest rates.

Accepted Answer

A) True 
 B)False

Question 14

Predatory pricing occurs when a firm sets _____.

Accepted Answer

A) prices below their competitors' prices 
B) prices so low that competitors are driven out of the market 
C) different prices for different customers 
D) uniform prices 
A) prices below their competitors' prices 
B) prices so low that competitors are driven out of the market 
C) different prices for different customers 
D) uniform prices

Question 15

Which of the statements below is false regarding special order decisions?

Accepted Answer

A) A fixed?cost element of an identical amount that is common among all alternatives is essentially irrelevant. 
B) Fixed cost per unit is equal to total fixed costs divided by a selected volume level. 
C) The contribution approach offers more detailed information than does the absorption approach. 
D) Fixed cost per unit is a necessary piece of information in the decision?making 
A) A fixed?cost element of an identical amount that is common among all alternatives is essentially irrelevant. 
B) Fixed cost per unit is equal to total fixed costs divided by a selected volume level. 
C) The contribution approach offers more detailed information than does the absorption approach. 
D) Fixed cost per unit is a necessary piece of information in the decision?making

Question 16

The contribution margin is computed using variable manufacturing costs, and variable selling and administrative costs.

Accepted Answer

A) True 
 B)False

Question 17

_____ are never relevant in the decision-making process.

Accepted Answer

A) Fixed costs 
B) Historical costs 
C) Material costs 
D) Variable costs 
A) Fixed costs 
B) Historical costs 
C) Material costs 
D) Variable costs

Question 18

Prices have little or no effect on volume

Accepted Answer

Highly ine

Question 19

Which of the following is correct?

Accepted Answer

A) The contribution income statement provides a gross margin. 
B) The absorption income statement provides a contribution margin. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) The contribution income statement provides a gross margin. 
B) The absorption income statement provides a contribution margin. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 20

Product design affects a minimal amount of costs.

Accepted Answer

A) True 
 B)False

The absorption approach emphasizes the distribution between fixed and variable costs.

_____ is the additional cost resulting from producing and selling one additional unit.

_____ is not normally included in the account?ing information provided to the decision maker.

Value engineering is used primarily during the production stage of the value chain.

Price elasticity measures the _____.

Qualitative aspects of information are those for which measures in dollars and cents is easy and precise.

Fixed cost per unit of product = total fixed manufacturing costs / some selected volume level.

Marketing plays a limited role in target costing.

A decision model is any method used for making a choice, sometimes requiring elaborate qualitative procedures.

Factors that are usually important in determining the feasibility of earning the desired target profit margin include inflation and interest rates.

Predatory pricing occurs when a firm sets _____.

Which of the statements below is false regarding special order decisions?

The contribution margin is computed using variable manufacturing costs, and variable selling and administrative costs.

_____ are never relevant in the decision-making process.

Prices have little or no effect on volume

Which of the following is correct?

Product design affects a minimal amount of costs.

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 5: Relevant Information and Decision Making With a Focus on Pricing Decisions

The absorption approach emphasizes the distribution between fixed and variable costs.

_____ is the additional cost resulting from producing and selling one additional unit.

_____ is not normally included in the account?ing information provided to the decision maker.

Value engineering is used primarily during the production stage of the value chain.

Price elasticity measures the _____.

Qualitative aspects of information are those for which measures in dollars and cents is easy and precise.

Fixed cost per unit of product = total fixed manufacturing costs / some selected volume level.

Marketing plays a limited role in target costing.

A decision model is any method used for making a choice, sometimes requiring elaborate qualitative procedures.

Factors that are usually important in determining the feasibility of earning the desired target profit margin include inflation and interest rates.

Predatory pricing occurs when a firm sets _____.

Which of the statements below is false regarding special order decisions?

The contribution margin is computed using variable manufacturing costs, and variable selling and administrative costs.

_____ are never relevant in the decision-making process.

Prices have little or no effect on volume

Which of the following is correct?

Product design affects a minimal amount of costs.

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters