Question 1

The amount of revenue that differs across decision choices is referred to as _________.

Accepted Answer

The answer of The amount of revenue that differs across...

Question 2

Southern Digital,Inc.
The Southern Digital,Inc.produces a high-quality computer chip.Unit production costs (based on capacity production of 100,000 units per year)follow:
Direct material                               $50
Directlabor                                      20
Overhead(20% variable)                10
Other information:
Sales price                                      100
SG\&A costs(40% variable)           &nbsp15

Refer to Southern Digital,Inc.Assume,for this question only,that the Memory Division is operating at a level of 70,000 chips per year.What is the minimum price that the division would consider on a "special order" of 1,000 chips to be distributed through normal channels?

Accepted Answer

A) $78 
B) $95 
C) $100 
D) $81 
A) $78 
B) $95 
C) $100 
D) $81

Question 3

Depreciation on factory equipment is normally a relevant cost in product line decisions.

Accepted Answer

A) True 
 B)False

Question 4

What are some factors that a company must consider when deciding to raise or lower sales prices on products?

Accepted Answer

Quantitative factors include the new con

Question 5

An outside firm selected to provide services to an organization is called a

Accepted Answer

A) contract vendor. 
B) lessee. 
C) network organization. 
D) centralized insourcer. 
A) contract vendor. 
B) lessee. 
C) network organization. 
D) centralized insourcer.

Question 6

The minimum selling price that should be acceptable in a special order situation is equal to total

Accepted Answer

A) production cost. 
B) variable production cost. 
C) variable costs and avoidable fixed costs. 
D) production cost plus a normal profit margin. 
A) production cost. 
B) variable production cost. 
C) variable costs and avoidable fixed costs. 
D) production cost plus a normal profit margin.

Question 7

Southern Digital,Inc.
The Southern Digital,Inc.produces a high-quality computer chip.Unit production costs (based on capacity production of 100,000 units per year)follow:
Direct material                               $50
Directlabor                                      20
Overhead(20% variable)                10
Other information:
Sales price                                      100
SG\&A costs(40% variable)           &nbsp15

Refer to Southern Digital,Inc.Assume,for this question only,that the Memory Division is presently operating at a level of 80,000 chips per year.Accepting a "special order" on 2,000 chips at $88 will

Accepted Answer

A) increase total corporate profits by $4,000. 
B) increase total corporate profits by $20,000. 
C) decrease total corporate profits by $14,000. 
D) decrease total corporate profits by $24,000. 
A) increase total corporate profits by $4,000. 
B) increase total corporate profits by $20,000. 
C) decrease total corporate profits by $14,000. 
D) decrease total corporate profits by $24,000.

Question 8

What is an opportunity cost and why is it a relevant cost?

Accepted Answer

An opportunity cost is not a "cost" in t

Question 9

Information that is related to past events is relevant in the decision-making process.

Accepted Answer

A) True 
 B)False

Question 10

Terrell and Associates,CPA's provides two types of services: audit and tax.All company personnel can perform either service.In efforts to market its services,the company relies on radio and billboards for advertising.Information on the company's projected operations for the coming year follows:
 
                                                                         $\text {\underline{ Aucht} }$         $\text {\underline{ Taxes} }$
$\begin{array}{lll}
\text { Revenue per billable hour } & \$ 35 & \$ 30 \
\text { Variable cost of professional labor } & 25 & 20 \
\text { Material cost per billable hour } & 2 & 3 \
\text { Allocated fixed costs per year } & 100,000 & 200,000 \
\text { Projected billable hours } & 14,000 & 10,000
\end{array}$
a. What is the coimpany s projected profit of (loss)?
b. If $ \$ 1 $ spent on advertising could increase either aucht services billable time by 1 hour or tax services billable time by 1 hour, o which service should the acvertising dollar be spent?

Accepted Answer

a. What is the coimpany s projected prof

Question 11

An ad hoc sales discount is

Accepted Answer

A) an allowance for an inferior quality of marketed goods. 
B) a discount that an ad hoc committee must decide on. 
C) brought about by competitive pressures. 
D) none of the above. 
A) an allowance for an inferior quality of marketed goods. 
B) a discount that an ad hoc committee must decide on. 
C) brought about by competitive pressures. 
D) none of the above.

Question 12

Ultralinear Electronics Corporation
Ultralinear Electronics Corporation manufactures and sells FM radios.Information on the prior year's operations (sales and production Model A1)is presented below:
             Sales price per unit       $30               Costs per unit:                      Direct material       7                Direct labor       4                Overhead (50% variable)       6                Selling costs (40% variable)       10                Production in units       10,000                Sales in units       9,500      
Refer to Ultralinear Electronics Corporation.Assume that the remaining Model A1 radios can be sold through normal channels or to a foreign buyer for $6 per unit.If sold through regular channels,the minimum acceptable price will be

Accepted Answer

A) $30. 
B) $33. 
C) $10. 
D) $4. 
A) $30. 
B) $33. 
C) $10. 
D) $4.

Question 13

The outsourcing decision is also referred to as a "make-or-buy" decision.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following activities within an organization would be least likely to be outsourced?

Accepted Answer

A) accounting 
B) data processing 
C) transportation 
D) product design 
A) accounting 
B) data processing 
C) transportation 
D) product design

Question 15

McCoy Corporation
McCoy Corporation sells a product for $21 per unit,and the standard cost card for the product shows the following costs:
Direct material                                $ \$ 2 $
Directlabor                                        3
$\text { Overhe ad (70\% fixed) }$                        $\underline{10}$
Total                                                $\underline{\$15}$

Refer to McCoy Corporation.Assume that McCoy has sufficient idle capacity to produce the 1,200 units.If McCoy wants to increase its operating profit by $6,000,what would it charge as a per-unit selling price?

Accepted Answer

A) $15.00 
B) $17.00 
C) $21.00 
D) $23.00 
A) $15.00 
B) $17.00 
C) $21.00 
D) $23.00

Question 16

When making a decision to discontinue an operating segment,allocated common costs are not considered.

Accepted Answer

A) True 
 B)False

Question 17

In an outsourcing decision,rent received from an outside party for facility use is a relevant cash inflow.

Accepted Answer

A) True 
 B)False

Question 18

When a scarce resource,such as space,exists in an organization,the criterion that should be used to determine production is

Accepted Answer

A) contribution margin per unit. 
B) selling price per unit. 
C) contribution margin per unit of scarce resource. 
D) total variable costs of production. 
A) contribution margin per unit. 
B) selling price per unit. 
C) contribution margin per unit of scarce resource. 
D) total variable costs of production.

Question 19

Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle?

Accepted Answer

A) direct labor 
B) equipment depreciation 
C) variable cost of utilities 
D) opportunity cost of production 
A) direct labor 
B) equipment depreciation 
C) variable cost of utilities 
D) opportunity cost of production

Question 20

In evaluating alternative courses of action,a manager should select the alternative that provides the highest incremental benefit to the company.

Accepted Answer

A) True 
 B)False

The amount of revenue that differs across decision choices is referred to as _________.

Depreciation on factory equipment is normally a relevant cost in product line decisions.

What are some factors that a company must consider when deciding to raise or lower sales prices on products?

An outside firm selected to provide services to an organization is called a

The minimum selling price that should be acceptable in a special order situation is equal to total

What is an opportunity cost and why is it a relevant cost?

Information that is related to past events is relevant in the decision-making process.

An ad hoc sales discount is

The outsourcing decision is also referred to as a "make-or-buy" decision.

Which of the following activities within an organization would be least likely to be outsourced?

When making a decision to discontinue an operating segment,allocated common costs are not considered.

In an outsourcing decision,rent received from an outside party for facility use is a relevant cash inflow.

When a scarce resource,such as space,exists in an organization,the criterion that should be used to determine production is

Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle?

In evaluating alternative courses of action,a manager should select the alternative that provides the highest incremental benefit to the company.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Sales price per unit	$30
Costs per unit:
Direct material	7
Direct labor	4
Overhead (50% variable)	6
Selling costs (40% variable)	10
Production in units	10,000
Sales in units	9,500

Exam 10: Relevant Information for Decision Making

The amount of revenue that differs across decision choices is referred to as _________.

Depreciation on factory equipment is normally a relevant cost in product line decisions.

What are some factors that a company must consider when deciding to raise or lower sales prices on products?

An outside firm selected to provide services to an organization is called a

The minimum selling price that should be acceptable in a special order situation is equal to total

What is an opportunity cost and why is it a relevant cost?

Information that is related to past events is relevant in the decision-making process.

An ad hoc sales discount is

The outsourcing decision is also referred to as a "make-or-buy" decision.

Which of the following activities within an organization would be least likely to be outsourced?

When making a decision to discontinue an operating segment,allocated common costs are not considered.

In an outsourcing decision,rent received from an outside party for facility use is a relevant cash inflow.

When a scarce resource,such as space,exists in an organization,the criterion that should be used to determine production is

Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle?

In evaluating alternative courses of action,a manager should select the alternative that provides the highest incremental benefit to the company.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters