Question 1

Resolving the conflict between the decision model and the performance-evaluation model is a problem in practice.

Accepted Answer

A) True 
 B)False  True

Question 2

The Hobby Shop,a manufacturer of toy airplanes,experienced a slow work process at the plant in Norfolk,Virginia.The setup time at one of the workstations was slow compared to the other workstation.An employee reported this issue to the floor manager.The manager proposed a plan to reduce the setup time,but it will cost $75,000.The change is expected to produce an additional 8,200 planes.The managerial accountant reported the following information:
 
Required:
Compute the increase in the throughput contribution:

Accepted Answer

A) $110,200 
B) $114,250 
C) $116,500 
D) $118,900 
E) $120,540 
A) $110,200 
B) $114,250 
C) $116,500 
D) $118,900 
E) $120,540 D

Question 3

How do managers express their analysis of relevant costs?

Accepted Answer

The relevant-cost analysis emphasizes quantitative factors that can be expressed in financial terms.The qualitative factors and quantitative nonfinancial factors cannot be measured easily in financial terms,but managers consider them in their decision-making process.

Question 4

Reorganization eliminates all manual handling of materials.

Accepted Answer

A) True 
 B)False

Question 5

What is an opportunity cost and why should managers consider it when making decisions?

Accepted Answer

Opportunity cost is the contribution to

Question 6

Decision models include:

Accepted Answer

A) only high-low analysis. 
B) only regression analysis. 
C) only qualitative analysis. 
D) only quantitative analysis. 
E) quantitative and qualitative analysis. 
A) only high-low analysis. 
B) only regression analysis. 
C) only qualitative analysis. 
D) only quantitative analysis. 
E) quantitative and qualitative analysis.

Question 7

Joint costs are ________ in the sell-or-process further decision.

Accepted Answer

A) relevant 
B) needed 
C) essential 
D) statistics 
E) irrelevant 
A) relevant 
B) needed 
C) essential 
D) statistics 
E) irrelevant

Question 8

The resource that restricts or limits the production or sale of products is:

Accepted Answer

A) never machine hours. 
B) the average contribution margin per unit of constraint. 
C) the lowest contribution margin per unit of constraint. 
D) the highest contribution margin per unit of constraint. 
E) the product that achieves additional capacity in the short-run. 
A) never machine hours. 
B) the average contribution margin per unit of constraint. 
C) the lowest contribution margin per unit of constraint. 
D) the highest contribution margin per unit of constraint. 
E) the product that achieves additional capacity in the short-run.

Question 9

Current disposal value of an old machine is:

Accepted Answer

A) past cost. 
B) relevant. 
C) irrelevant. 
D) sunk cost. 
E) batch cost. 
A) past cost. 
B) relevant. 
C) irrelevant. 
D) sunk cost. 
E) batch cost.

Question 10

Effective feedback might affect future predictions,the prediction used,the way choices are made,or the implementation of the decision.

Accepted Answer

A) True 
 B)False

Question 11

Managers should only consider incremental revenues and incremental separable costs in a sell-or-process-further decision.

Accepted Answer

A) True 
 B)False

Question 12

Throughput margin equals revenues plus the direct material costs of the goods sold.

Accepted Answer

A) True 
 B)False

Question 13

Producing the same goods or providing the same services within an organization is called ________.

Accepted Answer

A) outsourcing 
B) insourcing 
C) incremental cost 
D) full cost of product 
E) business function costs 
A) outsourcing 
B) insourcing 
C) incremental cost 
D) full cost of product 
E) business function costs

Question 14

The Wise Company manufactures a PT I Component that is used to make several of its products.The managerial accountant reported monthly production costs to produce 1,100 units of PT I Component included:
 
The managerial accountant estimates that 10% of the fixed overhead costs assigned to PT I Component will no longer be incurred if the company purchases the PT I Component from an outside supplier at $41.50 per unit.
If the manager at Wise Company accepts the offer from the outside supplier,what are the monthly avoidable costs,or those costs that will no longer be incurred? What is the monthly operating income if the manager at Wise Company purchases 1,000 units of PT I Component from an outside supplier? What is the maximum price that the manager at Wise Company should pay to the outside supplier?

Accepted Answer

A) $40,155;$1,650 decrease;$42.00 
B) $41,155;$1,650 increase;$42.06 
C) $42,155;$1,655 decrease;$42.10 
D) $43,155;$1,655 increase;$43.16 
E) $44,155;$1,670 decrease;$43.26 
A) $40,155;$1,650 decrease;$42.00 
B) $41,155;$1,650 increase;$42.06 
C) $42,155;$1,655 decrease;$42.10 
D) $43,155;$1,655 increase;$43.16 
E) $44,155;$1,670 decrease;$43.26

Question 15

When managers make decisions about adding or dropping customers,managers only focus on:

Accepted Answer

A) incremental costs only. 
B) opportunity costs only. 
C) allocating overhead costs. 
D) incremental and opportunity costs only. 
E) the value chain and not cost factors. 
A) incremental costs only. 
B) opportunity costs only. 
C) allocating overhead costs. 
D) incremental and opportunity costs only. 
E) the value chain and not cost factors.

Question 16

In Step 1 of solving a linear problem,fixed costs remain the same regardless of the product-mix decision,and they are irrelevant.

Accepted Answer

A) True 
 B)False

Question 17

Book value is:

Accepted Answer

A) original cost minus accumulated depreciation. 
B) original cost plus accumulated depreciation. 
C) past cost plus accumulated depreciation. 
D) future cost plus accumulated depreciation. 
E) future cost minus accumulated depreciation. 
A) original cost minus accumulated depreciation. 
B) original cost plus accumulated depreciation. 
C) past cost plus accumulated depreciation. 
D) future cost plus accumulated depreciation. 
E) future cost minus accumulated depreciation.

Question 18

Explain the difference of theory of constraints compared to activity-based costing systems.

Accepted Answer

The theory of constraints emphasizes the

Question 19

In product-mix decisions,as short-run changes in product mix occur,the costs that change:

Accepted Answer

A) are fixed with the number of units produced or sold. 
B) are mixed with the number of units produced or sold. 
C) vary with the number of units produced or sold. 
D) are idle and they never change with the number of units produced and sold. 
E) are not relevant because they are only short-run costs. 
A) are fixed with the number of units produced or sold. 
B) are mixed with the number of units produced or sold. 
C) vary with the number of units produced or sold. 
D) are idle and they never change with the number of units produced and sold. 
E) are not relevant because they are only short-run costs.

Question 20

The Engine Testing Organization tests engines before they are sold to manufacturers.The available machine-hours are limited and they are released as follows:
   
Required:
Compute the daily maximum production in units for the truck engine and the airplane engine in units that the assembly department can make if it works exclusively on truck engines,and airplane engines,respectively.Next,compute the daily maximum testing production in units for the truck engine and the airplane engine if the testing department works exclusively on each.

Accepted Answer

Truck engine: 166.66 machine-hours and 1

Resolving the conflict between the decision model and the performance-evaluation model is a problem in practice.

How do managers express their analysis of relevant costs?

Reorganization eliminates all manual handling of materials.

What is an opportunity cost and why should managers consider it when making decisions?

Decision models include:

Joint costs are ________ in the sell-or-process further decision.

The resource that restricts or limits the production or sale of products is:

Current disposal value of an old machine is:

Effective feedback might affect future predictions,the prediction used,the way choices are made,or the implementation of the decision.

Managers should only consider incremental revenues and incremental separable costs in a sell-or-process-further decision.

Throughput margin equals revenues plus the direct material costs of the goods sold.

Producing the same goods or providing the same services within an organization is called ________.

When managers make decisions about adding or dropping customers,managers only focus on:

In Step 1 of solving a linear problem,fixed costs remain the same regardless of the product-mix decision,and they are irrelevant.

Book value is:

Explain the difference of theory of constraints compared to activity-based costing systems.

In product-mix decisions,as short-run changes in product mix occur,the costs that change:

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Activity-Based Costing and Activity-Based Management

Pricing Decisions, customer Profitability, and Cost Management

Determining How Costs Behave

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Transfer Pricing

Performance Measurement and Compensation

Filters

Exam 9: Decision Making and Relevant Information

Resolving the conflict between the decision model and the performance-evaluation model is a problem in practice.

How do managers express their analysis of relevant costs?

Reorganization eliminates all manual handling of materials.

What is an opportunity cost and why should managers consider it when making decisions?

Decision models include:

Joint costs are ________ in the sell-or-process further decision.

The resource that restricts or limits the production or sale of products is:

Current disposal value of an old machine is:

Effective feedback might affect future predictions,the prediction used,the way choices are made,or the implementation of the decision.

Managers should only consider incremental revenues and incremental separable costs in a sell-or-process-further decision.

Throughput margin equals revenues plus the direct material costs of the goods sold.

Producing the same goods or providing the same services within an organization is called ________.

When managers make decisions about adding or dropping customers,managers only focus on:

In Step 1 of solving a linear problem,fixed costs remain the same regardless of the product-mix decision,and they are irrelevant.

Book value is:

Explain the difference of theory of constraints compared to activity-based costing systems.

In product-mix decisions,as short-run changes in product mix occur,the costs that change:

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Activity-Based Costing and Activity-Based Management

Pricing Decisions, customer Profitability, and Cost Management

Determining How Costs Behave

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Transfer Pricing

Performance Measurement and Compensation

Filters