Question 1

In a make-or-buy decision which costs can be considered relevant?

Accepted Answer

A) Unavoidable variable costs incremental fixed costs and sunk costs 
B) Incremental variable costs unavoidable fixed costs and opportunity costs 
C) Incremental variable costs incremental fixed costs and sunk costs 
D) Incremental variable costs incremental fixed costs and opportunity costs 
A) Unavoidable variable costs incremental fixed costs and sunk costs 
B) Incremental variable costs unavoidable fixed costs and opportunity costs 
C) Incremental variable costs incremental fixed costs and sunk costs 
D) Incremental variable costs incremental fixed costs and opportunity costs

Question 2

Miley Inc.has excess capacity.Under what situations should the company accept a special order for less than the current selling price?

Accepted Answer

A) Never 
B) When additional fixed costs must be incurred to accommodate the order 
C) When the company thinks it can use the cheaper materials without the customer's knowledge 
D) When incremental revenues exceed incremental costs 
A) Never 
B) When additional fixed costs must be incurred to accommodate the order 
C) When the company thinks it can use the cheaper materials without the customer's knowledge 
D) When incremental revenues exceed incremental costs

Question 3

During 2021 it cost Westa Inc.$18 per unit to produce part T5.During 2022 it has increased to $21 per unit.In 2022 Southside Company has offered to provide Part T5 for $16 per unit to Westa.As it pertains to the make-or-buy decision which statement is true?

Accepted Answer

A) Differential costs are $5 per unit. 
B) Incremental costs are $2 per unit. 
C) Net relevant costs are $2 per unit. 
D) Incremental revenues are $3 per unit. 
A) Differential costs are $5 per unit. 
B) Incremental costs are $2 per unit. 
C) Net relevant costs are $2 per unit. 
D) Incremental revenues are $3 per unit.

Question 4

Which of the following stages of the management decision-making process is improperly sequenced?

Accepted Answer

A) Evaluate possible courses of action F1S1S1W1F1F1F10 Make decision. 
B) Assign responsibility for the decision F1S1S1W1F1F1F10 Identify the problem. 
C) Identify the problem F1S1S1W1F1F1F10 Determine possible courses of action. 
D) Assign responsibility for decision F1S1S1W1F1F1F10 Determine possible courses of action. 
A) Evaluate possible courses of action F1S1S1W1F1F1F10 Make decision. 
B) Assign responsibility for the decision F1S1S1W1F1F1F10 Identify the problem. 
C) Identify the problem F1S1S1W1F1F1F10 Determine possible courses of action. 
D) Assign responsibility for decision F1S1S1W1F1F1F10 Determine possible courses of action.

Question 5

All of the following are relevant to the sell or process further decision except

Accepted Answer

A) costs incurred beyond the split-off point. 
B) revenues at the split-off point. 
C) costs incurred before the split-off point. 
D) revenues beyond the split-off point. 
A) costs incurred beyond the split-off point. 
B) revenues at the split-off point. 
C) costs incurred before the split-off point. 
D) revenues beyond the split-off point.

Question 6

Martin Company incurred the following costs for 70000 units: Variable costs $\$ 420,000$
Fixed costs $\quad 392,000$ Martin has received a special order from a foreign company for 3000 units.There is sufficient capacity to fill the order without jeopardizing regular sales.Filling the order will require spending an additional $6300 for shipping. If Martin wants to break even on the order what should the unit sales price be?

Accepted Answer

A) $6.00 
B) $8.10 
C) $11.60 
D) $13.70 
A) $6.00 
B) $8.10 
C) $11.60 
D) $13.70

Question 7

Which of the following amounts is irrelevant to the replacement decision?

Accepted Answer

A) $375000 
B) $135000 
C) $315000 
D) $60000 
A) $375000 
B) $135000 
C) $315000 
D) $60000

Question 8

Ruth Company produces 1000 units of a necessary component with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 34,000 \
\text { Direct Labor } & 15,000 \
\text { Variable Overhead } & 9,000 \
\text { Fixed Overhead } & 10,000
\end{array}$$ Ruth Company could avoid $6000 in fixed overhead costs if it acquires the components externally.If cost minimization is the major consideration and the company would prefer to buy the components what is the maximum external price that Ruth Company would accept to acquire the 1000 units externally?

Accepted Answer

A) $58000 
B) $64000 
C) $59000 
D) $62000 
A) $58000 
B) $64000 
C) $59000 
D) $62000

Question 9

The cost to produce Part A was $20 per unit in 2021.During 2022 it has increased to $23 per unit.In 2022 Supplier Company has offered to supply Part A for $18 per unit.For the make-or-buy decision

Accepted Answer

A) incremental revenues are $5 per unit. 
B) incremental costs are $3 per unit. 
C) net relevant costs are $3 per unit. 
D) differential costs are $5 per unit. 
A) incremental revenues are $5 per unit. 
B) incremental costs are $3 per unit. 
C) net relevant costs are $3 per unit. 
D) differential costs are $5 per unit.

Question 10

Incremental analysis is synonymous with

Accepted Answer

A) difficult analysis. 
B) differential analysis. 
C) gross profit analysis. 
D) derivative analysis. 
A) difficult analysis. 
B) differential analysis. 
C) gross profit analysis. 
D) derivative analysis.

Question 11

If Clemente could avoid $3000 of fixed overhead by accepting the offer net income would increase (decrease) by

Accepted Answer

A) $750. 
B) $(5850). 
C) $(3150). 
D) $6750. 
A) $750. 
B) $(5850). 
C) $(3150). 
D) $6750.

Question 12

A cost that cannot be changed by any present or future decision is a(n)

Accepted Answer

A) incremental cost. 
B)  opportunity cost. 
C) sunk cost. 
D) variable cost. 
A) incremental cost. 
B)  opportunity cost. 
C) sunk cost. 
D) variable cost.

Question 13

If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price then

Accepted Answer

A) only variable costs are relevant. 
B) fixed costs are not relevant. 
C) the order will likely be accepted. 
D) the order will likely be rejected. 
A) only variable costs are relevant. 
B) fixed costs are not relevant. 
C) the order will likely be accepted. 
D) the order will likely be rejected.

Question 14

Ruth Company produces 1000 units of a necessary component with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 27,000 \
\text { Direct Labor } & 16,000 \
\text { Variable Overhead } & 4,000 \
\text { Fixed Overhead } & 7,000
\end{array}$$ None of Ruth Company's fixed overhead costs can be reduced but another product could be made that would increase profit contribution by $8000 if the components were acquired externally.If cost minimization is the major consideration and the company would prefer to buy the components what is the maximum external price that Ruth Company would be willing to accept to acquire the 1000 units externally?

Accepted Answer

A) $46000 
B) $58000 
C) $51000 
D) $55000 
A) $46000 
B) $58000 
C) $51000 
D) $55000

Question 15

In incremental analysis total fixed costs will always remain constant under alternative courses of action.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not involved in the sell or process further decision?

Accepted Answer

A) Revenues 
B) Variable costs 
C) Opportunity costs 
D) Fixed costs 
A) Revenues 
B) Variable costs 
C) Opportunity costs 
D) Fixed costs

Question 17

Each of the following is a disadvantage of buying rather than making a component of a company's product except that

Accepted Answer

A) quality control specifications may not be met. 
B) the outside supplier could increase prices significantly in the future. 
C) profitable product lines may be dropped. 
D) the supplier may not deliver on time. 
A) quality control specifications may not be met. 
B) the outside supplier could increase prices significantly in the future. 
C) profitable product lines may be dropped. 
D) the supplier may not deliver on time.

Question 18

Crigui Music produces 60000 CDs on which to record music.The CDs have the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 13,000 \
\text { Direct Labor } & 15,000 \
\text { Variable Overhead } & 3,000 \
\text { Fixed Overhead } & 7,000
\end{array}$$ None of Crigui's fixed overhead costs can be reduced but another product could be made that would increase profit contribution by $4000 if the CDs were acquired externally.If cost minimization is the major consideration and the company would prefer to buy the CDs what is the maximum external price that Crigui would be willing to accept to acquire the 60000 units externally?

Accepted Answer

A) $38000 
B) $34000 
C) $35000 
D) $42000 
A) $38000 
B) $34000 
C) $35000 
D) $42000

Question 19

A company is within plant capacity.It is contemplating whether a special order should be accepted.The order will not impact regular sales.If the company accepts the special order what will occur?

Accepted Answer

A) Incremental costs will not be affected. 
B) Net income will increase if the special sales price per unit exceeds the unit variable costs. 
C) There are no incremental revenues. 
D) Both fixed and variable costs will increase. 
A) Incremental costs will not be affected. 
B) Net income will increase if the special sales price per unit exceeds the unit variable costs. 
C) There are no incremental revenues. 
D) Both fixed and variable costs will increase.

Question 20

If a company anticipates that other sales will be affected by the acceptance of a special order then

Accepted Answer

A) lost sales should be considered in the incremental analysis. 
B) lost sales should not be considered in the incremental analysis. 
C) the order should not be accepted. 
D) the order will only be accepted if the plant is below capacity. 
A) lost sales should be considered in the incremental analysis. 
B) lost sales should not be considered in the incremental analysis. 
C) the order should not be accepted. 
D) the order will only be accepted if the plant is below capacity.

In a make-or-buy decision which costs can be considered relevant?

Miley Inc.has excess capacity.Under what situations should the company accept a special order for less than the current selling price?

During 2021 it cost Westa Inc.$18 per unit to produce part T5.During 2022 it has increased to $21 per unit.In 2022 Southside Company has offered to provide Part T5 for $16 per unit to Westa.As it pertains to the make-or-buy decision which statement is true?

Which of the following stages of the management decision-making process is improperly sequenced?

All of the following are relevant to the sell or process further decision except

Which of the following amounts is irrelevant to the replacement decision?

The cost to produce Part A was $20 per unit in 2021.During 2022 it has increased to $23 per unit.In 2022 Supplier Company has offered to supply Part A for $18 per unit.For the make-or-buy decision

Incremental analysis is synonymous with

If Clemente could avoid $3000 of fixed overhead by accepting the offer net income would increase (decrease) by

A cost that cannot be changed by any present or future decision is a(n)

If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price then

In incremental analysis total fixed costs will always remain constant under alternative courses of action.

Which of the following is not involved in the sell or process further decision?

Each of the following is a disadvantage of buying rather than making a component of a company's product except that

A company is within plant capacity.It is contemplating whether a special order should be accepted.The order will not impact regular sales.If the company accepts the special order what will occur?

If a company anticipates that other sales will be affected by the acceptance of a special order then

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 13: Budgetary Control and Responsibility Accounting

In a make-or-buy decision which costs can be considered relevant?

Miley Inc.has excess capacity.Under what situations should the company accept a special order for less than the current selling price?

During 2021 it cost Westa Inc.$18 per unit to produce part T5.During 2022 it has increased to $21 per unit.In 2022 Southside Company has offered to provide Part T5 for $16 per unit to Westa.As it pertains to the make-or-buy decision which statement is true?

Which of the following stages of the management decision-making process is improperly sequenced?

All of the following are relevant to the sell or process further decision except

Which of the following amounts is irrelevant to the replacement decision?

The cost to produce Part A was $20 per unit in 2021.During 2022 it has increased to $23 per unit.In 2022 Supplier Company has offered to supply Part A for $18 per unit.For the make-or-buy decision

Incremental analysis is synonymous with

If Clemente could avoid $3000 of fixed overhead by accepting the offer net income would increase (decrease) by

A cost that cannot be changed by any present or future decision is a(n)

If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price then

In incremental analysis total fixed costs will always remain constant under alternative courses of action.

Which of the following is not involved in the sell or process further decision?

Each of the following is a disadvantage of buying rather than making a component of a company's product except that

A company is within plant capacity.It is contemplating whether a special order should be accepted.The order will not impact regular sales.If the company accepts the special order what will occur?

If a company anticipates that other sales will be affected by the acceptance of a special order then

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters