Question 1

Quantitative factors are outcomes that are measured in numerical terms.

Accepted Answer

A) True 
 B)False

Question 2

A decision model is a formal method for making a choice,frequently involving both quantitative and qualitative analyses.

Accepted Answer

A) True 
 B)False

Question 3

Axle and Wheel Manufacturing is approached by a European customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers.The following per unit data apply for sales to regular customers:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 33 \
\text { Direct labour } & 15 \
\text { Variable manufacturing support } & 24 \
\text { Fixed manufacturing support } & \underline{ 52} \
\quad \text { Total manufacturing costs } & 124 \
\text { Mark-up (50\%) } & 62 \
\text { Targeted selling price } &  \underline{\$ 186}
\end{array}$$ 
Axle and Wheel Manufacturing has excess capacity.
Required:
a.What is the full cost of the product per unit?
b.What is the contribution margin per unit?
c.Which costs are relevant for making the decision regarding this one-time-only special order? Why?
d.For Axle and Wheel Manufacturing,what is the minimum acceptable price of this one-time-only special order?
e.For this one-time-only special order,should Axle and Wheel Manufacturing consider a price of $100 per unit? Why or why not?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Axle and Wheel Manufacturing is approached by...

Question 4

How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of How does a manager go about choosing...

Question 5

________ costs are expected future costs and relevant revenues are expected future revenues that differ between the optional courses of action being considered.

Accepted Answer

A) Relevant 
B) Quantitative 
C) Qualitative 
D) Financial

Question 6

Feedback from previous decisions uses historical information and,therefore,is irrelevant for making future predictions.

Accepted Answer

A) True 
 B)False

Question 7

Answer the following questions using the information below:
Nullabor Corporation produces a part that is used in the manufacture of one of its products.The costs associated with the production of 10 000 units of this part are as follows:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 45000 \
\text { Direct labour } & 65000 \
\text { Variable factory overhead } & 30000 \
\text { Fixed factory overhead } & \underline { 70000 } \
\quad \text { Total costs } &  \underline{\$ 210000 }\
\end{array}$$ Of the fixed factory overhead costs,$30 000 is avoidable.
-If a company has excess capacity,the most it would pay for buying a product that it currently makes would be the:

Accepted Answer

A) market value less the usual mark-up on the product. 
B) market value of the product. 
C) total variable cost of producing the product. 
D) total cost of producing the product.

Question 8

What is a mathematical inequality or equality that must be appeased called?

Accepted Answer

A) Constraint 
B) Objective function 
C) Business function 
D) Operating policy

Question 9

When deciding to lease a new cutting machine or continue using the old machine,the following costs are relevant EXCEPT the:

Accepted Answer

A) $10 000 selling price of the old machine. 
B) $20 000 cost of the new machine. 
C) $3000 annual savings in operating costs if the new machine is purchased. 
D) $50 000 cost of the old machine.

Question 10

Camera Corner is considering eliminating Model AE2 from its camera line because of losses over the past quarter.The past three months of information for Model AE2 are summarised below:
$$\begin{array} { l r } 
\text { Sales (1000 units) } & \$ 300000 \
\text { Manufacturing costs: } & \
\text { Direct materials } & 150000 \
\text { Direct labour ( } \$ 15 \text { per hour) } & 60000 \
\quad \text { Overhead } & 100000 \
\text { Operating loss } & \$ 10000 )
\end{array}$$
Overhead costs are 70% variable and the remaining 30% is depreciation of special equipment for model AE2 that has no resale value.
If Model AE2 is dropped from the product line,operating profit will:

Accepted Answer

A) increase by $30 000. 
B) decrease by $20 000. 
C) decrease by $10 000. 
D) increase by $10 000.

Question 11

Management accountants work with managers by analysing and presenting relevant data to guide decisions.

Accepted Answer

A) True 
 B)False

Question 12

How can Lisa White encourage her salespeople to promote the more profitable model?

Accepted Answer

A) Provide higher sales commissions for higher priced items. 
B) Put all sales persons on salary. 
C) Provide higher sales commissions for items with the greatest contribution margin per constrained resource. 
D) Both B and C are correct.

Question 13

What is the formal process of choosing between alternatives known as?

Accepted Answer

A) Alternative model 
B) Decision model 
C) Prediction model 
D) Relevant model

Question 14

Place the following steps from the five-step decision process in order:
A = Make predictions about future costs
B = Evaluate performance to provide feedback
C = Implement the decision
D = Choose an alternative

Accepted Answer

A) ADCB 
B) DCAB 
C) CDAB 
D) DCBA

Question 15

Answer the following questions using the information below:
Jamberry Preserves currently makes jams and spreads and a variety of decorative jars used for packaging.An outside supplier has offered to supply all of the needed decorative jars.For this make-or-buy decision,a cost analysis revealed the following avoidable unit costs for the decorative jars:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 0.25 \
\text { Direct labour } & 0.03 \
\text { Unit-related support costs } & 0.10 \
\text { Batch-related support costs } & 0.12 \
\text { Product-sustaining support costs } & 0.22 \
\text { Facility-sustaining support costs } & 0.28 \
 { \text { Total cost per jar } } & \underline{ \$ 1.00}
\end{array}$$
-The relevant cost per jar is:

Accepted Answer

A) $0.72 per jar. 
B) $1.00 per jar. 
C) $0.38 per jar. 
D) $0.28 per jar.

Question 16

The textbook discusses a five-step decision process.Briefly explain each of the five steps.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of The textbook discusses a five-step decision process.Briefly...

Question 17

Answer the following questions using the information below:
Bright Lights Company manufactures small flashlights and is considering raising the price by 50 cents a unit for the coming year.With a 50-cent price increase,demand is expected to fall by 3000 units.
 $$\begin{array} { l r r } 
& \text { Currently } & \text { Projected } \
\text { Demand } & 20000 \text { units } & 18000 \text { units } \
\text { Selling price } & \$ 4.50 & \$ 5.00 \
\text { Incremental cost per unit } & \$ 3.00 & \$ 3.00
\end{array}$$
-If the price increase is implemented,operating profit is projected to:

Accepted Answer

A) decrease by $4500. 
B) decrease by $4000. 
C) increase by $6000. 
D) increase by $4000.

Question 18

An example of a quantitative factor for the decision-making process is:

Accepted Answer

A) product quality. 
B) manufacturing overhead. 
C) customer satisfaction. 
D) employee morale.

Question 19

________ contribution equals revenues minus the direct materials costs of the goods sold.

Accepted Answer

A) Total 
B) Unit 
C) Throughput 
D) Financial

Question 20

If Option 1 costs $100 and Option 2 costs $80,then the differential cost is $180.

Accepted Answer

A) True 
 B)False

Exam 10: Decision Making and Relevant Information

Quantitative factors are outcomes that are measured in numerical terms.

A decision model is a formal method for making a choice,frequently involving both quantitative and qualitative analyses.

How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity? _ _

________ costs are expected future costs and relevant revenues are expected future revenues that differ between the optional courses of action being considered.

Feedback from previous decisions uses historical information and,therefore,is irrelevant for making future predictions.

What is a mathematical inequality or equality that must be appeased called?

When deciding to lease a new cutting machine or continue using the old machine,the following costs are relevant EXCEPT the:

Management accountants work with managers by analysing and presenting relevant data to guide decisions.

How can Lisa White encourage her salespeople to promote the more profitable model?

What is the formal process of choosing between alternatives known as?

Place the following steps from the five-step decision process in order: A = Make predictions about future costs B = Evaluate performance to provide feedback C = Implement the decision D = Choose an alternative

The textbook discusses a five-step decision process.Briefly explain each of the five steps. _ _

An example of a quantitative factor for the decision-making process is:

________ contribution equals revenues minus the direct materials costs of the goods sold.

If Option 1 costs $100 and Option 2 costs $80,then the differential cost is $180.

Exam 10: Decision Making and Relevant Information

Quantitative factors are outcomes that are measured in numerical terms.

A decision model is a formal method for making a choice,frequently involving both quantitative and qualitative analyses.

________ costs are expected future costs and relevant revenues are expected future revenues that differ between the optional courses of action being considered.

Feedback from previous decisions uses historical information and,therefore,is irrelevant for making future predictions.

What is a mathematical inequality or equality that must be appeased called?

When deciding to lease a new cutting machine or continue using the old machine,the following costs are relevant EXCEPT the:

Management accountants work with managers by analysing and presenting relevant data to guide decisions.

How can Lisa White encourage her salespeople to promote the more profitable model?

What is the formal process of choosing between alternatives known as?

Place the following steps from the five-step decision process in order: A = Make predictions about future costs B = Evaluate performance to provide feedback C = Implement the decision D = Choose an alternative

The textbook discusses a five-step decision process.Briefly explain each of the five steps. _____________________________________________________________________________________________ _____________________________________________________________________________________________

An example of a quantitative factor for the decision-making process is:

________ contribution equals revenues minus the direct materials costs of the goods sold.

If Option 1 costs $100 and Option 2 costs $80,then the differential cost is $180.

The textbook discusses a five-step decision process.Briefly explain each of the five steps. _ _