Question 1

A constraint function in a linear-programming problem might focus on:

Accepted Answer

A) sales dollars. 
B) labor hours. 
C) variable costs. 
D) fixed costs. 
E) qualitative factors. 
A) sales dollars. 
B) labor hours. 
C) variable costs. 
D) fixed costs. 
E) qualitative factors.

Question 2

HiTech wants to drop the Regular product line.If the line is dropped,company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities.What would be the impact on operating income if Regular is discontinued?

Accepted Answer

A) $0. 
B) $10,400 increase. 
C) $20,000 increase. 
D) $39,600 decrease. 
E) None of thesE. 
A) $0. 
B) $10,400 increase. 
C) $20,000 increase. 
D) $39,600 decrease. 
E) None of thesE.

Question 3

Fester Company is considering whether to sell Retox at the split-off point or subject it to further processing and produce a more refined product known as Retox-F.Consider the following items:
I.The selling price of Retox-F
II.The joint processing cost of Retox.
III.The separable cost of producing Retox-F.
Which of the above items is (are)relevant to Foster's decision to process Retox into Retox-F?

Accepted Answer

A) I only. 
B) II only. 
C) III only. 
D) I and II. 
E) I and III. 
A) I only. 
B) II only. 
C) III only. 
D) I and II. 
E) I and III.

Question 4

A company that is operating at full capacity should emphasize those products and services that have the:

Accepted Answer

A) lowest total per-unit costs. 
B) highest contribution margin per unit. 
C) highest contribution margin per unit of scarce resource. 
D) highest operating income. 
E) highest sales volumE. 
A) lowest total per-unit costs. 
B) highest contribution margin per unit. 
C) highest contribution margin per unit of scarce resource. 
D) highest operating income. 
E) highest sales volumE.

Question 5

Mueller has been approached about providing a new service to its clients.The company will bill clients $140 per hour;the related hourly variable and fixed operating costs will be $75 and $18,respectively.If all employees are currently working at full capacity on other client matters,the per-hour opportunity cost of being unable to provide this new service is:

Accepted Answer

A) $0. 
B) $47. 
C) $65. 
D) $93. 
E) $140. 
A) $0. 
B) $47. 
C) $65. 
D) $93. 
E) $140.

Question 6

The term "opportunity cost" is best defined as the benefit associated with a rejected alternative when making a choice.

Accepted Answer

A) True 
 B)False

Question 7

A special order generally should be accepted if:

Accepted Answer

A) its revenue exceeds allocated fixed costs,regardless of the variable costs associated with the order. 
B) excess capacity exists and the revenue exceeds all variable costs associated with the order. 
C) excess capacity exists and the revenue exceeds allocated fixed costs. 
D) the revenue exceeds total costs,regardless of available capacity. 
E) the revenue exceeds variable costs,regardless of available capacity. 
A) its revenue exceeds allocated fixed costs,regardless of the variable costs associated with the order. 
B) excess capacity exists and the revenue exceeds all variable costs associated with the order. 
C) excess capacity exists and the revenue exceeds allocated fixed costs. 
D) the revenue exceeds total costs,regardless of available capacity. 
E) the revenue exceeds variable costs,regardless of available capacity.

Question 8

The cost of inventory currently owned by a company is an example of a(n):

Accepted Answer

A) opportunity cost. 
B) sunk cost. 
C) relevant cost. 
D) differential cost. 
E) future cost. 
A) opportunity cost. 
B) sunk cost. 
C) relevant cost. 
D) differential cost. 
E) future cost.

Question 9

An architecture firm currently offers services that appeal to both individuals and commercial clients.If the firm decides to discontinue services to individuals because of ongoing losses,which of the following costs could the company likely avoid?

Accepted Answer

A) General corporate overhead that was allocated to individual clients. 
B) Building depreciation. 
C) Insurance. 
D) Variable operating costs. 
E) Monthly installment payments on general-purpose,computer drafting equipment. 
A) General corporate overhead that was allocated to individual clients. 
B) Building depreciation. 
C) Insurance. 
D) Variable operating costs. 
E) Monthly installment payments on general-purpose,computer drafting equipment.

Question 10

Sophisticates' Corner sells clothing,shoes,and accessories at a suburban location near Boston.Information for the just concluded calendar year follows.

Accepted Answer

@#IMG-DLM& 
Management is considering closing the

Question 11

Factors in a decision problem that cannot be expressed in numerical terms are:

Accepted Answer

A) qualitative in nature. 
B) quantitative in nature. 
C) predictive in nature. 
D) sensitive in nature. 
E) uncertain in naturE. 
A) qualitative in nature. 
B) quantitative in nature. 
C) predictive in nature. 
D) sensitive in nature. 
E) uncertain in naturE.

Question 12

Product costs incurred after the split-off point in a joint processing environment are termed:

Accepted Answer

A) separable processing costs. 
B) joint product costs. 
C) non-relevant costs. 
D) scrap costs. 
E) spoilage costs. 
A) separable processing costs. 
B) joint product costs. 
C) non-relevant costs. 
D) scrap costs. 
E) spoilage costs.

Question 13

When deciding whether to sell a product at the split-off point or process it further,joint costs are not usually relevant because:

Accepted Answer

A) such amounts do not help to increase sales revenue. 
B) such amounts only slightly increase a company's sales margin. 
C) such amounts are sunk and do not change with the decision. 
D) the sales revenue does not decrease to the extent that it should,if compared with separable processing. 
E) such amounts reflect opportunity costs. 
A) such amounts do not help to increase sales revenue. 
B) such amounts only slightly increase a company's sales margin. 
C) such amounts are sunk and do not change with the decision. 
D) the sales revenue does not decrease to the extent that it should,if compared with separable processing. 
E) such amounts reflect opportunity costs.

Question 14

Lido manufactures A and B from a joint process (cost = $80,000).Ten thousand pounds of B can be sold at split-off for $15 per pound or processed further at an additional cost of $20,000 and later sold for $16.If Lido decides to process B beyond the split-off point,operating income will:

Accepted Answer

A) increase by $10,000. 
B) increase by $20,000. 
C) decrease by $10,000. 
D) decrease by $20,000. 
E) decrease by $58,000. 
A) increase by $10,000. 
B) increase by $20,000. 
C) decrease by $10,000. 
D) decrease by $20,000. 
E) decrease by $58,000.

Question 15

Which of the following statements regarding costs and decision making is correct?

Accepted Answer

A) Fixed costs must be considered only on a per-unit basis. 
B) Per-unit fixed cost amounts are valid only for make-or-buy decisions. 
C) Per-unit fixed costs can be misleading because such amounts appear to behave as variable costs when,in actuality,the amounts are related to fixed expenditures. 
D) Sunk costs can be misleading in make-or-buy decisions because these amounts appear to be relevant differential costs. 
E) Opportunity costs should be ignored when evaluating decision alternatives. 
A) Fixed costs must be considered only on a per-unit basis. 
B) Per-unit fixed cost amounts are valid only for make-or-buy decisions. 
C) Per-unit fixed costs can be misleading because such amounts appear to behave as variable costs when,in actuality,the amounts are related to fixed expenditures. 
D) Sunk costs can be misleading in make-or-buy decisions because these amounts appear to be relevant differential costs. 
E) Opportunity costs should be ignored when evaluating decision alternatives.

Question 16

Ortega Interiors provides design services to residential and commercial clients.The residential services produce a contribution margin of $450,000 and have traceable fixed operating costs of $480,000.Management is studying whether to drop the residential operation.If closed,the fixed operating costs will fall by $370,000 and Ortega's income will:

Accepted Answer

A) increase by $30,000. 
B) increase by $80,000. 
C) increase by $340,000. 
D) decrease by $80,000. 
E) decrease by $340,000. 
A) increase by $30,000. 
B) increase by $80,000. 
C) increase by $340,000. 
D) decrease by $80,000. 
E) decrease by $340,000.

Question 17

When using a graphical solution to a linear programming problem,the optimal solution will lie in an area commonly known as the:

Accepted Answer

A) region of maximization. 
B) feasible region. 
C) objective region. 
D) constraint region. 
E) curvilinear region. 
A) region of maximization. 
B) feasible region. 
C) objective region. 
D) constraint region. 
E) curvilinear region.

Question 18

An accounting information system should be designed to provide information that is useful.To be useful the information must be:

Accepted Answer

A) qualitative rather than quantitative. 
B) unique and unavailable through other sources. 
C) historical in nature and not purport to predict the future. 
D) marginal between two alternatives. 
E) relevant,accurate,and timely. 
A) qualitative rather than quantitative. 
B) unique and unavailable through other sources. 
C) historical in nature and not purport to predict the future. 
D) marginal between two alternatives. 
E) relevant,accurate,and timely.

Question 19

If Smythe follows proper managerial accounting practices,how many units of Product X should it produce?

Accepted Answer

A) 5,000. 
B) 1,500. 
C) 8,000. 
D) 4,500. 
E) 6,000. 
A) 5,000. 
B) 1,500. 
C) 8,000. 
D) 4,500. 
E) 6,000.

Question 20

Song,a division of Carolina Enterprises,currently makes 100,000 units of a product that has created a number of manufacturing problems.Song's costs follow.  
If Song were to discontinue production,fixed manufacturing costs would be reduced by 70%.The relevant cost of deciding whether the division should purchase the product from an outside supplier is:

Accepted Answer

A) $540,000. 
B) $594,000. 
C) $666,000. 
D) $720,000. 
E) $726,000. 
A) $540,000. 
B) $594,000. 
C) $666,000. 
D) $720,000. 
E) $726,000.

A constraint function in a linear-programming problem might focus on:

HiTech wants to drop the Regular product line.If the line is dropped,company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities.What would be the impact on operating income if Regular is discontinued?

A company that is operating at full capacity should emphasize those products and services that have the:

The term "opportunity cost" is best defined as the benefit associated with a rejected alternative when making a choice.

A special order generally should be accepted if:

The cost of inventory currently owned by a company is an example of a(n):

An architecture firm currently offers services that appeal to both individuals and commercial clients.If the firm decides to discontinue services to individuals because of ongoing losses,which of the following costs could the company likely avoid?

Sophisticates' Corner sells clothing,shoes,and accessories at a suburban location near Boston.Information for the just concluded calendar year follows.

Factors in a decision problem that cannot be expressed in numerical terms are:

Product costs incurred after the split-off point in a joint processing environment are termed:

When deciding whether to sell a product at the split-off point or process it further,joint costs are not usually relevant because:

Lido manufactures A and B from a joint process (cost = $80,000).Ten thousand pounds of B can be sold at split-off for $15 per pound or processed further at an additional cost of $20,000 and later sold for $16.If Lido decides to process B beyond the split-off point,operating income will:

Which of the following statements regarding costs and decision making is correct?

When using a graphical solution to a linear programming problem,the optimal solution will lie in an area commonly known as the:

An accounting information system should be designed to provide information that is useful.To be useful the information must be:

If Smythe follows proper managerial accounting practices,how many units of Product X should it produce?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 14: Decision Making: Relevant Costs and Benefits

A constraint function in a linear-programming problem might focus on:

HiTech wants to drop the Regular product line.If the line is dropped,company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities.What would be the impact on operating income if Regular is discontinued?

A company that is operating at full capacity should emphasize those products and services that have the:

The term "opportunity cost" is best defined as the benefit associated with a rejected alternative when making a choice.

A special order generally should be accepted if:

The cost of inventory currently owned by a company is an example of a(n):

An architecture firm currently offers services that appeal to both individuals and commercial clients.If the firm decides to discontinue services to individuals because of ongoing losses,which of the following costs could the company likely avoid?

Sophisticates' Corner sells clothing,shoes,and accessories at a suburban location near Boston.Information for the just concluded calendar year follows.

Factors in a decision problem that cannot be expressed in numerical terms are:

Product costs incurred after the split-off point in a joint processing environment are termed:

When deciding whether to sell a product at the split-off point or process it further,joint costs are not usually relevant because:

Lido manufactures A and B from a joint process (cost = $80,000).Ten thousand pounds of B can be sold at split-off for $15 per pound or processed further at an additional cost of $20,000 and later sold for $16.If Lido decides to process B beyond the split-off point,operating income will:

Which of the following statements regarding costs and decision making is correct?

When using a graphical solution to a linear programming problem,the optimal solution will lie in an area commonly known as the:

An accounting information system should be designed to provide information that is useful.To be useful the information must be:

If Smythe follows proper managerial accounting practices,how many units of Product X should it produce?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters