Exam 6: Relevant Information for Decision Making With a Focus on Operational Decisions

In deciding whether to add or delete a product,the salary of the plant manager is an ________.Assume the plant manager supervised the production of several products.

Madison Company produces a part that is used in the manufacture of one of its products.The costs associated with the production of 5,000 units of this part are as follows: Direct materials \ 108,000 Direct labor 156,000 Variable factory overhead 72,000 Fixed factory overhead 168,000 Total costs \5 04,000 Of the fixed factory overhead costs,$72,000 are avoidable.Middleton Company has offered to sell 5,000 units of the same part to Madison for $87.00 per unit.Assuming there is no other use for the facilities,Madison Company should ________.

Sunk cost is used to describe a historical cost or past cost.

Future costs are irrelevant if they are the same under all feasible alternatives.

The split-off point is the juncture in manufacturing where the joint products become individually identifiable.

LL Company produces and sells a product that has variable costs of $9 per unit and fixed costs of $200,000 per year.If production decreases from 50,000 to 40,000 units,the total cost per unit will ________.

Joint products should be processed beyond the split-off point if ________.

If a department in a department store is eliminated,________ costs will not continue.

In deciding whether to add or delete a product,the insurance expense associated with the custom-built equipment used to produce the product is an ________ cost.Assume the equipment will be sold if the company discontinues the product.

Fixed overhead costs that will continue regardless of a make-or-buy decision are ________ to the make-or-buy decision.

A company has 10,000 hours of capacity and manufactures two products.Product 1 takes 2 hours per unit.Product 2 takes 3 hours per unit.The contribution margin per unit for Product 1 is $5.The contribution margin per unit for Product 2 is $6.Neither product has enough demand to use all of the plant capacity,but the demand for both products exceeds the plant capacity.Which product or products should be manufactured?

Which of the following is(are)characteristic(s)of joint products?

If a department in a department store is under consideration to be eliminated,unavoidable fixed expenses are ________ to the decision.

BEE Company is considering the replacement of a machine that is presently used in production.Which of the following items are irrelevant to the replacement decision?

Brookfield Corporation has a joint process that produces three products: X,Y and Z.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $100,000.Other data follows: Sales Value Separable Processing Sales Value Product at Split-Off Costs after Split-Off at Completion X \ 128,000 \ 16,000 \ 150,000 Y 75,000 26,000 99,000 Z 32,600 20,000 50,000 Processing Product X beyond the split-off point will cause profits to ________.

When choosing between two alternatives,what of the following are relevant costs?

Melissa Company produces and sells a product that has variable costs of $8 per unit and fixed costs of $240,000 per year.If 20,000 units are produced and sold in a year,what is the total cost per unit?

Corrao Company manufactures a part for its production cycle.The costs per unit for 10,000 units of the part are as follows: Per Unit Direct materials \ 20.00 Direct labor 13.00 Variable factory overhead 15.00 Fixed factory overhead Total costs \6 2.00 The fixed factory overhead costs are unavoidable.Assuming no other use for the facilities,what is the highest price that Corrao Company should be willing to pay for the part?

Qualitative information can influence decisions to add or drop a department.

Which of the following item is irrelevant to the decision whether to process joint products beyond the split-off point?