Question 1

Which of the following is not a characteristic of a tactical decision?

Accepted Answer

A)  It is a short term decision. 
B)  It usually does not involve changing the capacity of the company. 
C)  It is difficult to reverse. 
D)  Qualitative factors are relevant. 
A)  It is a short term decision. 
B)  It usually does not involve changing the capacity of the company. 
C)  It is difficult to reverse. 
D)  Qualitative factors are relevant.

Question 2

When a costing system has been designed explicitly to influence certain decisions, this will:

Accepted Answer

A)  discourage efficiency. 
B)  encourage efficiency. 
C)  discourage biases. 
D)  encourage biases. 
A)  discourage efficiency. 
B)  encourage efficiency. 
C)  discourage biases. 
D)  encourage biases.

Question 3

When the objectives of the decision are in conflict, one objective may be specified as the decision criterion and the other objectives are established as:

Accepted Answer

A)  differential criteria. 
B)  irrelevant criteria. 
C)  constraints. 
D)  opportunity costs. 
A)  differential criteria. 
B)  irrelevant criteria. 
C)  constraints. 
D)  opportunity costs.

Question 4

Which of the following statements is true of relevant costs?

Accepted Answer

A)  Variable costs are always relevant. 
B)  Sunk costs are never relevant. 
C)  If costs are the same under two alternatives, they are not relevant. 
D)  Sunk costs are never relevant AND if costs are the same under two alternatives, they are not relevant. 
A)  Variable costs are always relevant. 
B)  Sunk costs are never relevant. 
C)  If costs are the same under two alternatives, they are not relevant. 
D)  Sunk costs are never relevant AND if costs are the same under two alternatives, they are not relevant.

Question 5

Rapid Growth Pty Ltd is presently operating at full capacity. They received a special order that, if accepted, would require refusing some sales to regular customers. Which of the following factors should management consider when making their decision?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 6

Which of the following statements about the decision-making process is/are true?
i. The first step in the decision-making process is to define or clarify a decision problem into clear terms that can be addressed.
ii. Before alternatives can be identified, the necessary data must first be collected.
iii. After the alternatives are identified, the criterion on which a decision will be made must be specified.

Accepted Answer

A)  i 
B)  ii 
C)  iii 
D)  All of the given answers 
A)  i 
B)  ii 
C)  iii 
D)  All of the given answers

Question 7

In order to be relevant to a decision, cost or benefit information must involve ________, rather than ________.

Accepted Answer

A)  a past event; a future event 
B)  actual data; estimated data 
C)  a future event; a past event 
D)  a past event; a current event 
A)  a past event; a future event 
B)  actual data; estimated data 
C)  a future event; a past event 
D)  a past event; a current event

Question 8

In the relative sales value method, joint costs are allocated between products:

Accepted Answer

A)  in proportion to their sales value at split-off point. 
B)  in proportion to their profit margin at split-off point. 
C)  in proportion to the separable costs at split-off point. 
D)  in proportion to cost of production of a joint product. 
A)  in proportion to their sales value at split-off point. 
B)  in proportion to their profit margin at split-off point. 
C)  in proportion to the separable costs at split-off point. 
D)  in proportion to cost of production of a joint product.

Question 9

In a decision to keep or replace a piece of equipment, calculate the total yearly expense of keeping the old equipment using the following data.

Accepted Answer

A)  $105 000 
B)  $25 000 
C)  $95 000 
D)  $130 000 
A)  $105 000 
B)  $25 000 
C)  $95 000 
D)  $130 000

Question 10

An accounting information system should be designed to provide useful information. To be useful the information must be:

Accepted Answer

A)  qualitative not quantitative. 
B)  unique and unavailable through other sources. 
C)  historical in nature and not purport to predict the future. 
D)  relevant, accurate and timely. 
A)  qualitative not quantitative. 
B)  unique and unavailable through other sources. 
C)  historical in nature and not purport to predict the future. 
D)  relevant, accurate and timely.

Question 11

Which of the following statements regarding short-term decisions is true?

Accepted Answer

A)  Fixed costs must only be considered on a per unit basis. 
B)  Fixed costs will actually behave as variable costs when they are unitised for special decisions. 
C)  Unitised fixed costs are valid only for make or buy decisions. 
D)  Unitised fixed costs are misleading because they appear to behave as variable costs when in fact they are not. 
A)  Fixed costs must only be considered on a per unit basis. 
B)  Fixed costs will actually behave as variable costs when they are unitised for special decisions. 
C)  Unitised fixed costs are valid only for make or buy decisions. 
D)  Unitised fixed costs are misleading because they appear to behave as variable costs when in fact they are not.

Question 12

Which of the following steps in the decision making process would be primarily the responsibility of the management accountant?

Accepted Answer

A)  Identifying the alternative courses of actions 
B)  Specifying the decision criterion 
C)  Selecting a course of action 
D)  Clarifying the problem 
A)  Identifying the alternative courses of actions 
B)  Specifying the decision criterion 
C)  Selecting a course of action 
D)  Clarifying the problem

Question 13

When excess capacity exists, the only relevant cost associated with a special order will usually be which cost?

Accepted Answer

A)  Fixed cost 
B)  Variable cost 
C)  Administrative cost 
D)  Allocated fixed cost 
A)  Fixed cost 
B)  Variable cost 
C)  Administrative cost 
D)  Allocated fixed cost

Question 14

A firm has the following cost data per unit.  
Calculate total cost per unit.

Accepted Answer

A)  $3.25 
B)  $4.25 
C)  $1.75 
D)  $2.25 
A)  $3.25 
B)  $4.25 
C)  $1.75 
D)  $2.25

Question 15

When considering the allocation of joint costs, which of the following statements (if any) is false?

Accepted Answer

A)  If there are no beginning inventories and all products are sold at the split-off point, the relative sales value method and the constant gross margin percentage methods yield the same results. 
B)  In order to use the actual sales value at split-off method, management does not have to determine which products will be produced beyond the split-off point or what separable costs will be incurred. 
C)  A problem with the physical measures method of allocation is that it may not be related to the product's ability to produce revenue. 
D)  The cause-effect criterion is the key principle in allocating costs when joint costing is used. 
A)  If there are no beginning inventories and all products are sold at the split-off point, the relative sales value method and the constant gross margin percentage methods yield the same results. 
B)  In order to use the actual sales value at split-off method, management does not have to determine which products will be produced beyond the split-off point or what separable costs will be incurred. 
C)  A problem with the physical measures method of allocation is that it may not be related to the product's ability to produce revenue. 
D)  The cause-effect criterion is the key principle in allocating costs when joint costing is used.

Question 16

A firm incurs manufacturing costs totalling $240 000 in process 1 to produce the following three beverages emerging from that process at the split-off point.
Apple juice: sold immediately it emerges from Process 1 without further processing for $0.70 litre.
Apple cider: processed further in Process 2 at an additional cost of $0.66667 litre, then sold for $1.50 litre
Apple pulp: processed further in Process 3 at an additional cost of $1.50 litre, then sold for $3.50 litre.
The following data relates to the period in which the joint costs were incurred.  
What is the amount of joint cost that would be allocated to apple juice if the net realisable value method had been used?

Accepted Answer

A)  $120 000 
B)  $80 000 
C)  $84 000 
D)  $91 000 
A)  $120 000 
B)  $80 000 
C)  $84 000 
D)  $91 000

Which of the following is not a characteristic of a tactical decision?

When a costing system has been designed explicitly to influence certain decisions, this will:

When the objectives of the decision are in conflict, one objective may be specified as the decision criterion and the other objectives are established as:

Which of the following statements is true of relevant costs?

Rapid Growth Pty Ltd is presently operating at full capacity. They received a special order that, if accepted, would require refusing some sales to regular customers. Which of the following factors should management consider when making their decision?

In order to be relevant to a decision, cost or benefit information must involve , rather than .

In the relative sales value method, joint costs are allocated between products:

In a decision to keep or replace a piece of equipment, calculate the total yearly expense of keeping the old equipment using the following data.

An accounting information system should be designed to provide useful information. To be useful the information must be:

Which of the following statements regarding short-term decisions is true?

Which of the following steps in the decision making process would be primarily the responsibility of the management accountant?

When excess capacity exists, the only relevant cost associated with a special order will usually be which cost?

A firm has the following cost data per unit. Calculate total cost per unit.

When considering the allocation of joint costs, which of the following statements (if any) is false?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 19: Information for Decisions: Relevant Costs and Benefits

Which of the following is not a characteristic of a tactical decision?

When a costing system has been designed explicitly to influence certain decisions, this will:

When the objectives of the decision are in conflict, one objective may be specified as the decision criterion and the other objectives are established as:

Which of the following statements is true of relevant costs?

Rapid Growth Pty Ltd is presently operating at full capacity. They received a special order that, if accepted, would require refusing some sales to regular customers. Which of the following factors should management consider when making their decision?

In order to be relevant to a decision, cost or benefit information must involve ________, rather than ________.

In the relative sales value method, joint costs are allocated between products:

In a decision to keep or replace a piece of equipment, calculate the total yearly expense of keeping the old equipment using the following data.

An accounting information system should be designed to provide useful information. To be useful the information must be:

Which of the following statements regarding short-term decisions is true?

Which of the following steps in the decision making process would be primarily the responsibility of the management accountant?

When excess capacity exists, the only relevant cost associated with a special order will usually be which cost?

A firm has the following cost data per unit. Calculate total cost per unit.

When considering the allocation of joint costs, which of the following statements (if any) is false?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

In order to be relevant to a decision, cost or benefit information must involve , rather than .