Question 1

Product quality is seldom a factor in make or buy decisions.

Accepted Answer

A) True 
 B)False  False

Question 2

To ensure high quality in outsourcing decisions, organisations typically negotiate contracts with

Accepted Answer

A)  A high margin for error 
B)  No uncertainties 
C)  Specific performance criteria 
D)  The lowest overall cost 
A)  A high margin for error 
B)  No uncertainties 
C)  Specific performance criteria 
D)  The lowest overall cost C

Question 3

An order from a new customer always constitutes a special order.

Accepted Answer

A) True 
 B)False  False

Question 4

Mr. Bigletter is employed at an annual salary of $25,000. He plans to start his own business and estimates that he can gross $30,000 annually. If he chooses to open the new business, his foregone salary is a (an)

Accepted Answer

A)  Irrelevant cost 
B)  Sunk cost 
C)  Opportunity cost 
D)  Incremental cost 
A)  Irrelevant cost 
B)  Sunk cost 
C)  Opportunity cost 
D)  Incremental cost

Question 5

If financial statement data are used to evaluate a decision to discontinue a business

Accepted Answer

A)  Average costs are often mistakenly included as relevant information 
B)  Average costs are often correctly included as relevant information 
C)  Qualitative factors are irrelevant 
D)  Financial statement data is useless in this decision-making context 
A)  Average costs are often mistakenly included as relevant information 
B)  Average costs are often correctly included as relevant information 
C)  Qualitative factors are irrelevant 
D)  Financial statement data is useless in this decision-making context

Question 6

Non-routine operating decisions differ from routine operating decisions in that non-routine decisions

Accepted Answer

A)  Ignore cash flows 
B)  Consider cash flows 
C)  Do not happen on a regular basis 
D)  Involve small dollar amounts 
A)  Ignore cash flows 
B)  Consider cash flows 
C)  Do not happen on a regular basis 
D)  Involve small dollar amounts

Question 7

Yvonne and Ken own and operate Deluxe Housecleaning Service. Which of the following is a qualitative factor associated with dropping carpet cleaning from their current line of services?

Accepted Answer

A)  The timeliness with which they can provide other cleaning services 
B)  The quality of their current carpet cleaning equipment 
C)  The potential effect on demand for their other services 
D)  The lost revenue from current customers 
A)  The timeliness with which they can provide other cleaning services 
B)  The quality of their current carpet cleaning equipment 
C)  The potential effect on demand for their other services 
D)  The lost revenue from current customers

Question 8

The physical output method of joint product cost allocation

Accepted Answer

A)  is useful for all product costing 
B)  is rarely used 
C)  is useful only when the output for all main products can be expressed in the same physical measure 
D)  is useful when products have similar net realisable values 
A)  is useful for all product costing 
B)  is rarely used 
C)  is useful only when the output for all main products can be expressed in the same physical measure 
D)  is useful when products have similar net realisable values

Question 9

Managers should always emphasise products with the highest total contribution margin.

Accepted Answer

A) True 
 B)False

Question 10

In deciding whether to manufacture a part or buy it from an outside supplier, which of the following is an irrelevant cost?

Accepted Answer

A)  Direct labor 
B)  Variable overhead 
C)  Fixed overhead that will be avoided if the part is purchased from an outside supplier 
D)  Fixed overhead that will continue even if the part is purchased from an outside supplier 
A)  Direct labor 
B)  Variable overhead 
C)  Fixed overhead that will be avoided if the part is purchased from an outside supplier 
D)  Fixed overhead that will continue even if the part is purchased from an outside supplier

Question 11

Effect on brand name recognition is a qualitative factor that managers should consider in

Accepted Answer

A)  Product line keep and drop decisions 
B)  Special order decisions 
C)  Cost prediction decisions 
D)  Make or buy decisions 
A)  Product line keep and drop decisions 
B)  Special order decisions 
C)  Cost prediction decisions 
D)  Make or buy decisions

Question 12

In the decision to drop a product line, fixed costs are often classified as

Accepted Answer

A)  Avoidable or sunk 
B)  Sunk or opportunity 
C)  Product or period 
D)  Incremental or avoidable 
A)  Avoidable or sunk 
B)  Sunk or opportunity 
C)  Product or period 
D)  Incremental or avoidable

Question 13

Separable costs are

Accepted Answer

A)  costs incurred after the split-off point to process products further 
B)  costs incurred before the split-off point 
C)  all costs incurred before and after the split-off point 
D)  only the costs to package and ship the product 
A)  costs incurred after the split-off point to process products further 
B)  costs incurred before the split-off point 
C)  all costs incurred before and after the split-off point 
D)  only the costs to package and ship the product

Question 14

Accuracy of cost estimates is one of the uncertainties in this type of decision.

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III

Question 15

A company manufactures chips used in the production of computers. The chips can be purchased for $50 each from an outside vendor. It costs the manufacturer $60 a chip to produce them, of which 25% is fixed overhead cost. What are the relevant costs for this decision? Based on these costs, which option should the company choose?

Accepted Answer

A)  i 
B)  ii 
C)  iii 
D)  iv 
A)  i 
B)  ii 
C)  iii 
D)  iv

Question 16

Managers should discontinue a business if its contribution margin is less than the sum of

Accepted Answer

A)  Relevant fixed costs and opportunity costs 
B)  Relevant fixed costs and sunk costs 
C)  Relevant opportunity costs and sunk costs 
D)  Relevant opportunity costs and profits 
A)  Relevant fixed costs and opportunity costs 
B)  Relevant fixed costs and sunk costs 
C)  Relevant opportunity costs and sunk costs 
D)  Relevant opportunity costs and profits

Question 17

The shadow price of a slack variable in a linear programming solution that maximises the total contribution margin reflects

Accepted Answer

A)  The amount of excess capacity available for the associated constraint 
B)  The decrease in contribution margin that occurs if a unit of the associated product is produced 
C)  The contribution margin returned by the firm's profitable product 
D)  The increase in contribution margin that would occur if another unit of the constrained resource were available 
A)  The amount of excess capacity available for the associated constraint 
B)  The decrease in contribution margin that occurs if a unit of the associated product is produced 
C)  The contribution margin returned by the firm's profitable product 
D)  The increase in contribution margin that would occur if another unit of the constrained resource were available

Question 18

Tyke, Ltd. produces 2 products A and B, each requiring direct material and labor. Total labor available is 200 hours, and 300 pounds of material. Each unit of A sells for $10, and B sells for $15. Given the following linear programming information:   What are the variable costs per unit for A and B?

Accepted Answer

A)  $4 and $15 
B)  $14 and $19 
C)  $6 and $10 
D)  $7 and $14 
A)  $4 and $15 
B)  $14 and $19 
C)  $6 and $10 
D)  $7 and $14

Question 19

A product emphasis decision may involve

Accepted Answer

A)  Sunk costs and opportunity costs 
B)  Multiple resource constraints and sunk costs 
C)  Multiple products and qualitative factors 
D)  Sunk costs and qualitative factors 
A)  Sunk costs and opportunity costs 
B)  Multiple resource constraints and sunk costs 
C)  Multiple products and qualitative factors 
D)  Sunk costs and qualitative factors

Question 20

The general rule for special orders is

Accepted Answer

A)  Profit should be greater after the special order than before it 
B)  Only take special orders when excess capacity exists 
C)  The organisation should be as well off after taking the order as it was before taking it 
D)  Ignore all fixed costs associated with the special order 
A)  Profit should be greater after the special order than before it 
B)  Only take special orders when excess capacity exists 
C)  The organisation should be as well off after taking the order as it was before taking it 
D)  Ignore all fixed costs associated with the special order

Product quality is seldom a factor in make or buy decisions.

To ensure high quality in outsourcing decisions, organisations typically negotiate contracts with

An order from a new customer always constitutes a special order.

Mr. Bigletter is employed at an annual salary of $25,000. He plans to start his own business and estimates that he can gross $30,000 annually. If he chooses to open the new business, his foregone salary is a (an)

If financial statement data are used to evaluate a decision to discontinue a business

Non-routine operating decisions differ from routine operating decisions in that non-routine decisions

Yvonne and Ken own and operate Deluxe Housecleaning Service. Which of the following is a qualitative factor associated with dropping carpet cleaning from their current line of services?

The physical output method of joint product cost allocation

Managers should always emphasise products with the highest total contribution margin.

In deciding whether to manufacture a part or buy it from an outside supplier, which of the following is an irrelevant cost?

Effect on brand name recognition is a qualitative factor that managers should consider in

In the decision to drop a product line, fixed costs are often classified as

Separable costs are

Accuracy of cost estimates is one of the uncertainties in this type of decision.

Managers should discontinue a business if its contribution margin is less than the sum of

The shadow price of a slack variable in a linear programming solution that maximises the total contribution margin reflects

Tyke, Ltd. produces 2 products A and B, each requiring direct material and labor. Total labor available is 200 hours, and 300 pounds of material. Each unit of A sells for $10, and B sells for $15. Given the following linear programming information: What are the variable costs per unit for A and B?

A product emphasis decision may involve

The general rule for special orders is

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters

Exam 9: Relevant Costs for Decision Making

Product quality is seldom a factor in make or buy decisions.

To ensure high quality in outsourcing decisions, organisations typically negotiate contracts with

An order from a new customer always constitutes a special order.

Mr. Bigletter is employed at an annual salary of $25,000. He plans to start his own business and estimates that he can gross $30,000 annually. If he chooses to open the new business, his foregone salary is a (an)

If financial statement data are used to evaluate a decision to discontinue a business

Non-routine operating decisions differ from routine operating decisions in that non-routine decisions

Yvonne and Ken own and operate Deluxe Housecleaning Service. Which of the following is a qualitative factor associated with dropping carpet cleaning from their current line of services?

The physical output method of joint product cost allocation

Managers should always emphasise products with the highest total contribution margin.

In deciding whether to manufacture a part or buy it from an outside supplier, which of the following is an irrelevant cost?

Effect on brand name recognition is a qualitative factor that managers should consider in

In the decision to drop a product line, fixed costs are often classified as

Separable costs are

Accuracy of cost estimates is one of the uncertainties in this type of decision.

Managers should discontinue a business if its contribution margin is less than the sum of

The shadow price of a slack variable in a linear programming solution that maximises the total contribution margin reflects

Tyke, Ltd. produces 2 products A and B, each requiring direct material and labor. Total labor available is 200 hours, and 300 pounds of material. Each unit of A sells for $10, and B sells for $15. Given the following linear programming information: What are the variable costs per unit for A and B?

A product emphasis decision may involve

The general rule for special orders is

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters