Exam 19: Information for Decisions: Relevant Costs and Benefits

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 with an additional cost of $0.66667 litre,then sold for $1.50 litre Apple pulp: processed further in Process 3 with 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 physical measures method had been used?

The joint cost allocation method that ensures that the gross margin for each product is identical is the:

Mod Clothiers makes women's clothes.It costs $28 000 to produce 5000 pairs of polka-dot polyester pants.They have been unable to sell the pants at their usual price of $50.00.The company is evaluating two alternatives.They could sell the pants 'as is' for a total $15 000 or they could modify the pants and sell them for a total of $20 000.At what cost to modify each pair of pants,would Mod Clothiers be indifferent between the two alternatives?

When making decisions,the quantitative information considered consists of factors relevant to the decision that cannot be expressed effectively in numerical terms.

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

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 constant gross margin method had been used?

Manufacturers sometimes sell products at less than full price for a special order.The analysis of such decisions focuses on:

Xebex Pty Ltd is considering whether to make or buy a component used in the production of Faz Machines.The annual cost of producing the 100 000 components used by the company is as follows.If Xebex were to discontinue production of the component,direct fixed manufacturing costs would be reduced by 80 per cent.Xebex should buy the 100 000 components if the cost of purchasing per unit is less than what amount?

Consider a situation where an activity-based costing system is in use rather than a conventional volume-based costing system.Which of the following statements is/are true?

Opportunity cost is best defined as:

When a joint production process results in two or more products being produced simultaneously,the products are termed:

Jaspar Ltd has 1000 units in inventory that cost $2.00 per unit to produce.Due to changing technology,the sales department is having difficulty selling the product.It will cost $500 to scrap the units.The company should consider any price over:

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

The book value of an asset such as equipment is an example of:

A joint cost is:

When making the decision of whether to process further a joint product,it is generally better to allocate the joint costs using the relative sales value method to ensure the correct decision is made.

Sunshine Products is a multiproduct firm.The revenues of a single product are $200 000 when 10 000 units are sold.Variable costs are $16 per unit.Direct fixed expenses of $25 000 consist primarily of depreciation on equipment specialised to the product.By what amount will Sunshine Products' cash flow change if the product is dropped?

Zoota Ltd makes four products: Alta,Bepha,Delma and Gamta.The selling price and per unit costs are show below.*Alta and Delma share the same factory;therefore,monthly rent is allocated equally between the two products.Other allocated monthly fixed costs include administrative costs,which are allocated based on a $2/unit charge.What will be the company's total fixed cost (excluding rent)after Delma is dropped? (Assuming that sales volume = production volume).

Lipex Pty c joint process.Each product may be sold at the split-off point or processed further.Additional processing requires no special facilities,and production costs of further processing are entirely variable and traceable to the products involved.Joint production costs for the year were $60 000.Sales values and costs are as follows.Allocate the joint production costs based on the physical units method.What are the joint costs assigned to product A?

The primary advantage of differential analysis is that it: