Question 1

All of the following are product mix considerations except

Accepted Answer

A) What constraint(s)stops us from making (or displaying)all of the units we can sell? 
B) Which products offer the highest contribution margin per unit of the constraint? 
C) Would emphasizing one product over another affect fixed costs? 
D) Which product has the most sunk costs? 
A) What constraint(s)stops us from making (or displaying)all of the units we can sell? 
B) Which products offer the highest contribution margin per unit of the constraint? 
C) Would emphasizing one product over another affect fixed costs? 
D) Which product has the most sunk costs?

Question 2

A company should ________ when making a short-term special decision.

Accepted Answer

A) focus on qualitative factors only 
B) focus on quantitative factors only 
C) separate variable costs from fixed costs 
D) use a traditional direct costing approach 
A) focus on qualitative factors only 
B) focus on quantitative factors only 
C) separate variable costs from fixed costs 
D) use a traditional direct costing approach

Question 3

Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $47,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $22,000,000 for the golfing season. About 420,000 golfers are expected each year. Variable costs are about $17 per golfer. The Mountaintop golf course is a price-taker and won't be able to charge more than its competitors who charge $79 per round of golf. What profit will it earn in terms of dollars?

Accepted Answer

A) $18,320,000 
B) $(4,040,000) 
C) $4,040,000 
D) $(22,000,000) 
A) $18,320,000 
B) $(4,040,000) 
C) $4,040,000 
D) $(22,000,000)

Question 4

In a special sales order decision, the special price must exceed the variable cost of filling the order. In other words, the special order must have

Accepted Answer

A) sunk costs. 
B) a positive contribution margin. 
C) opportunity costs. 
D) a negative contribution margin. 
A) sunk costs. 
B) a positive contribution margin. 
C) opportunity costs. 
D) a negative contribution margin.

Question 5

Fixed costs that continue to exist even after a product line is discontinued are called

Accepted Answer

A) unavoidable fixed costs. 
B) avoidable fixed costs. 
C) variable fixed costs. 
D) relevant fixed costs. 
A) unavoidable fixed costs. 
B) avoidable fixed costs. 
C) variable fixed costs. 
D) relevant fixed costs.

Question 6

Tunnel Incorporated provided the following information regarding its single product:   The regular selling price for the product is $80. The annual quantity of units produced and sold is 44,000 units (the costs above relate to the 44,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 1050 units at a sale price of $43 per product? The special order units would not require any variable selling and administrative expenses. (Round any intermediary calculations to the nearest cent. Round your final answer to the nearest dollar.)

Accepted Answer

A) Decrease by $20,045 
B) Decrease by $23,956 
C) Increase by $20,045 
D) Increase by $23,956 
A) Decrease by $20,045 
B) Decrease by $23,956 
C) Increase by $20,045 
D) Increase by $23,956

Question 7

In a special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be

Accepted Answer

A) opportunity costs. 
B) irrelevant to the decision. 
C) relevant to the decision. 
D) sunk costs. 
A) opportunity costs. 
B) irrelevant to the decision. 
C) relevant to the decision. 
D) sunk costs.

Question 8

Companies that are considered price-takers usually employ the _________________ approach to pricing products.

Accepted Answer

A) cost-plus pricing 
B) percentage pricing 
C) target costing 
D) cost plus one 
A) cost-plus pricing 
B) percentage pricing 
C) target costing 
D) cost plus one

Question 9

A company's manager would consider which of the following in deciding whether to discontinue its electronics product line?

Accepted Answer

A) The costs it could save by discontinuing the product line 
B) The revenues it would lose from discontinuing the product line 
C) How discontinuing the electronics product line would affect sales of its other products (like CDs) 
D) All of the above 
A) The costs it could save by discontinuing the product line 
B) The revenues it would lose from discontinuing the product line 
C) How discontinuing the electronics product line would affect sales of its other products (like CDs) 
D) All of the above

Question 10

Lie Around Furniture manufactures two products: Couches and Beds. The following data are available:   The company can manufacture 4 couches per machine hour and 2 bed per machine hour. The company's production capacity is 13,900 machine hours per month.
To maximize profits, what product and how many units should the company produce in a month?

Accepted Answer

A) 55,600 couches and 27,800 beds 
B) 27,800 beds 
C) 55,600 couches 
D) 27,800 couches and 55,600 beds 
A) 55,600 couches and 27,800 beds 
B) 27,800 beds 
C) 55,600 couches 
D) 27,800 couches and 55,600 beds

Question 11

The managerial accountant at the Mill Factory informed the factory manager that the costs to manufacture 20,000 units of a part include the following costs:
   The Mill Factory noted that $70,000 of its fixed costs to produce the product is an avoidable cost. The managerial accountant considers whether the company should make the product or buy the product from the Frame Factory because the managerial accountant at the Frame Factory offered to produce and sell 20,000 units of the same product to the manager at the Mill Factory at $50 per unit. Should the managerial accountant make-or-buy the product at $50 per unit? What is the total cost to make the product? What is the total cost to buy the product? Explain your answer.

Accepted Answer

The managerial accountant at t

Question 12

Buzz Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available:   The company can manufacture two food processors per machine hour and three espresso machines per machine hour. The company's production capacity is 1,200 machine hours per month.
What is the contribution margin per machine hour for espresso machines?

Accepted Answer

A) $585 
B) $315 
C) $190 
D) $105 
A) $585 
B) $315 
C) $190 
D) $105

Question 13

When making product mix decisions, companies are most profitable when they maximize production of the product with the greatest sales demand.

Accepted Answer

A) True 
 B)False

Question 14

Managers should consider ________ when making any sort of decision.

Accepted Answer

A) only fixed costs 
B) sunk costs 
C) only variable costs 
D) revenues that differ among alternatives 
A) only fixed costs 
B) sunk costs 
C) only variable costs 
D) revenues that differ among alternatives

Question 15

Companies operating in highly competitive industries are generally price-setters.

Accepted Answer

A) True 
 B)False

Question 16

The following information relates to current production of outdoor chaise lounges at Backyard Posh:   The regular selling price per chaise lounge is $350. The company is analyzing the opportunity to accept a special sales order for 300 chaise lounges at a price of $210 per unit. Variable marketing and administrative costs would be $15 per unit lower than on regular sales. Fixed costs would increase by $15,000. The company has the capacity to produce 115,000 chaise lounges per year, but is currently producing and selling 13,000 chaise lounges per year. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected?

Accepted Answer

A) Decrease by $26,400 
B) Decrease by $11,400 
C) Increase by $26,400 
D) Increase by $11,400 
A) Decrease by $26,400 
B) Decrease by $11,400 
C) Increase by $26,400 
D) Increase by $11,400

Question 17

Label each item below as relevant or irrelevant in making a decision.
a)Cost of roof repair made on rental property last year
b)The cost of insurance on a new vehicle when deciding to buy a new vehicle
c)Cost of new equipment under evaluation to replace used equipment
d)Original cost of old equipment that is being evaluated for replacement
e)Cost of previous year's insurance policy on old equipment being evaluated for replacement
f)Accumulated depreciation on old equipment being evaluated for replacement

Accepted Answer

a)irrelevant
b)relev

Question 18

Percy Productions has three models: D, E, and F. The following information is available:   Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Assume Percy Productions is able to increase the sales revenue of product F to $32,000 with no change in volume of units sold and no change in variable costs or fixed costs. What effect will this have on operating income?

Accepted Answer

A) Increase $11,000 
B) Increase $24,000 
C) Decrease $11,000 
D) Decrease $24,000 
A) Increase $11,000 
B) Increase $24,000 
C) Decrease $11,000 
D) Decrease $24,000

Question 19

A company that has a constraint and produces multiple products should emphasize the production of the product that has the

Accepted Answer

A) highest sales price per unit. 
B) highest contribution margin per unit. 
C) highest contribution margin per unit of constraint. 
D) most unit sales out of all the products. 
A) highest sales price per unit. 
B) highest contribution margin per unit. 
C) highest contribution margin per unit of constraint. 
D) most unit sales out of all the products.

Question 20

Managers must consider which of the following when pricing a product or service?

Accepted Answer

A) All costs 
B) Only period costs 
C) Only manufacturing costs 
D) Only variable costs 
A) All costs 
B) Only period costs 
C) Only manufacturing costs 
D) Only variable costs

All of the following are product mix considerations except

A company should ________ when making a short-term special decision.

In a special sales order decision, the special price must exceed the variable cost of filling the order. In other words, the special order must have

Fixed costs that continue to exist even after a product line is discontinued are called

In a special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be

Companies that are considered price-takers usually employ the _________________ approach to pricing products.

A company's manager would consider which of the following in deciding whether to discontinue its electronics product line?

When making product mix decisions, companies are most profitable when they maximize production of the product with the greatest sales demand.

Managers should consider ________ when making any sort of decision.

Companies operating in highly competitive industries are generally price-setters.

A company that has a constraint and produces multiple products should emphasize the production of the product that has the

Managers must consider which of the following when pricing a product or service?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

The Master Budget

Performance Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 8: Relevant Costs for Short-Term Decisions

All of the following are product mix considerations except

A company should ________ when making a short-term special decision.

In a special sales order decision, the special price must exceed the variable cost of filling the order. In other words, the special order must have

Fixed costs that continue to exist even after a product line is discontinued are called

In a special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be

Companies that are considered price-takers usually employ the _________________ approach to pricing products.

A company's manager would consider which of the following in deciding whether to discontinue its electronics product line?

When making product mix decisions, companies are most profitable when they maximize production of the product with the greatest sales demand.

Managers should consider ________ when making any sort of decision.

Companies operating in highly competitive industries are generally price-setters.

A company that has a constraint and produces multiple products should emphasize the production of the product that has the

Managers must consider which of the following when pricing a product or service?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

The Master Budget

Performance Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters