Chapter 11 - quiz practices to help with connect PDF

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quiz practices to help with connect...

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1. From a purely short-term financial perspective a special sales order should be accepted if - The special sales price on the order exceeds the relevant costs of the order 2. A mathematical technique that can be used to solve constrained optimization problems including short-term product mix is - Linear programming 3. In deciding whether to process a given product beyond the split-off point - compare incremental revenues for the product to the product's separable processing costs - ignore allocated joint-manufacturing costs 4. Which of the following statements are true? - Sunk costs are never relevant for decision-making purposes - A relevant cost can be either fixed or variable - Fixed costs are generally not relevant for managerial decision making 5. Special-order decisions - Represent a one-time opportunity that generally come directly from customers 6. Given a single resource constraint (and no demand constraints), the optimum short-term product-mix for a two product firm - will occur at one of the two end points of the iso-production line associated with the constraint 7. Opportunity Costs - Would likely exist if a manufacturing plant were operating at capacity and a decision to produce a special sales order was being evaluated - Are always relevant for decision making - Represent the benefit foregone of choosing a particular decision alternative - Would be zero for a resource (e.g. factory machine hours) with excess capacity. 8. In a make-vs.-buy decision, relevant costs include - The external purchase price charged by a supplier - All avoidable manufacturing costs 9. The point in the production process where products with separate identities arise in the point - split-off 10. When costs are classified by behaviour, __________ costs are generally relevant for decisions because they differ while ____________ costs are often irrelevant because they do not change. - Variable, fixed 11. A sunk cost - Is never relevant for decision-making purposes 12. A potential problem associated with the use of relevant cost analysis to evaluate managers is that the managers may - Try to substitute controllable variable costs with fixed costs 13. When using lean accounting, special orders are evaluated within the context of the ______ _______ in which they are located - Value stream

14. Relevant short-run financial considerations of a decision to drop (or keep) a product (or service) - The contribution that would be lost if the product were dropped - Variable costs associated with the product, both production and sales-related - Avoidable short-term fixed costs 15. Common managerial mistakes in relevant costs analysis include - improperly treating fixed costs as relevant for short-term decision making 16. Management accountants can facilitate managerial decision making by - Providing decision makers with both relevant cost information and strategic considerations regarding decision options 17. In the decision to keep or replace your automobile, the original purchase price of your current car is a(n) _______ cost. - Sunk 18. Performing a relevant cost and strategic analysis includes - Predicting future values of relevant costs and revenues - Identifying and collecting relevant information - Considering strategic issues associated with the decision 19. In a joint production process, costs incurred after the split-off point are _____ costs. - Separable processing - Traceable processing 20. Total relevant cost for a special order decision equals _______ costs. - Out-of-pocket + opportunity 21. When multiple outputs arise naturally from a common resource input, a(n) _____ ______ process occurs. - Joint production 22. Evaluating performance of implemented decisions is _______. - The final step in the five-step decision-making process - A continual process - Helpful for informing future managerial decisions 23. Costs incurred prior to the split-off point ______ traceable to individual products - Are not 24. Assume that a firm producing two products and subject to multiple resource (production) constraints prepares a graphical analysis of feasible production possibilities. From this set of production possibilities, the optimum short-term product mix solution can be determined using a(n) ______ ______ analysis. - Corner points 25. A relevant cost analysis - Is focused on individual decisions - Has a product-cost focus - May not be linked to the firm’s strategy 26. The optimal short-term product mix will include just a single product (output) - Only when there is one production constraint 27. Choosing to have an outside firm provide a basic service function is called _____ - Outsourcing

28. The term used to describe the set of output possibilities (combinations) for each resource constraint in a short-term product-mix problem is a(n) _____ line. - iso-production 29. In terms of a decision such as whether to keep (repair) or replace an existing piece of machinery, batch-level costs are ______ - Irrelevant if the amount of the cost is the same under each decision alternative. - Relevant if they change in total as a result of the decision 30. Basic results (i.e. not associated with any available supplementary reports) from running the Solver routine in Excel, in conjunction with determining optimum short-term product mix include _________. - the values of the decision variables that optimize the decision, subjects to the indicated constraints - the optimum value of the dependent variable in the model (in the product mix decisions, this is contribution margin) - information as to total resource consumption (use) at the optimum solution 31. Cost incurred after the split-off point that can be traced to individual products are known as _____ ______ costs. - Separable costs 32. Relevant costs and revenues in a decision to replace or refurnish (repair) a machine used in the manufacturing process include - Cost of building modifications needed to accommodate the new (larger) machine - Electrical power (assuming the replacement of the machine is more efficient) - Repair cost of the old machine - Estimated salvage (disposal) value of the new machine at the end of its useful life 33. The relevant financial question in a decision to drop (or keep) a product or service is whether the product’s _________ costs. - Contribution margin is greater than the product’s avoidable fixed 34. The first step in the five-step decision-making process outlined in the chapter is ______. - Determine the organization’s business environment and competitive strategy 35. In a keep-or-drop...

36. Costs that are typically relevant for assessing a special order decision include ______ costs. - The variable portion of batch-level costs - Unit-level costs 37. When a company sets prices below average variable cost and plans to raise prices later to recover the losses from the low prices, they are engaging in _____ ______.

- Predatory pricing 38. In terms of assessing service offerings of Not-for-Profit (NFP) organizations, relevant cost analysis _________. - Can be used to identify projected deficits (funding shortfalls) for new service offerings - Can be applied because the focus of analysis is on incremental costs and incremental revenues for these offerings - Can be used, for example, to determine the desirability of new service offerings - Can be used to determine resource needs for proposed new programs 39. Edison Corp. is considering either purchasing or leasing a new copy machine.

- 4,800,000 - [$60,000 + ($0.025 x Q) = ($200,000 - $40,000) + $20,000. - Q = 4,800,000.] 40. The second step in the five-step decision-making process outlined in the chapter is _________. - Specify the criteria and identify alternative actions. 41. The decision to keep or replace a piece of equipment ________. - Should consider relevant financial and nonfinancial information. - May be made using either a differential or total cost analysis. 42. The optimal short-term product mix will include just a single product (output)_____. - Only when there is one production constraint. 43. Evaluating performance of implemented decisions is _________. - Helpful for informing future managerial decisions - A continual process - The final step in the five-step decision-making process 44. Strategic/qualitative considerations associated with the decision to drop or to keep an existing product (or service) line include_______. - Product (service) demand inter-dependencies - Impact on employee morale 45. Which of the following factor(s) are important to decision making when cash flows will be received or paid over an extended period of time? - Both time value of money and qualitative factors 46. “Shadow price” refers to the: - Amount a decision maker would pay for each additional unit of the constraint (e.g., machine hours) 47. For decision-making purposes (e.g. deciding whether to repair or replace an asset used in the business) a total cost analysis _______. - Will always result in the same decision as a differential cost analysis

48. Information contained in the optional “Sensitivity Report” by running Solver in Excel includes: - The indicated contribution margin per unit for each product - The “allowable range” for coefficient values for the decision variables (here, contribution margins per unit) - “Shadow price” information - Final (I.e., optimum) values for the decision variables (here, number of units of each product that should be produced/sold)

1.

ABC inc

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- Accept order bc ….0.75 per unit If a special sales order

- 2.50 3. The optimum short-term product mix for a two-product firm when there is only a single resource constraint (and no demand constraints) is determined - By estimating the total contribution margin associated with each of the two end points of the iso-production line associated with the resource 4. Joint-production costs in a sell-or-process further decision are ___ costs - Common - sunk 5. The term used to describe a firm’s one-time opportunity to sell a specified quantity of its product or service is a - Special order 6. Costs relevant to the make-vs-buy decision include - Direct materials needed to produce the item internally - External purchase price of the part, sub-assembly, or product in question 7. In terms of assessing service offerings of Not-for-Profit organizations, relevant cost analysis ___ - All except “cannot normally be used..” 8. The danger of reporting fixed costs on a per unit basis is that this practice - Makes them appear relevant 9. the decision to keep or replace a piece of equipment - Should consider relevant financial and nonfinancial info - May be made using either a differential or total cost analysis

10. Batch level costs ____ a decision - May or may not be relevant to 11. Costs incurred after the split-off point that can be traced to individual products are known as - Separable processing 12. A strategic cost analysis - Is integrative in nature - Has a customer focus 13. When a relevant cost analysis for a proposed new program …... - Decide if steps should be taken to make up the deficit 14. For decision-making purposes …. A total cost analysis - Will always result in the same decision as a differential cost analysis 15. The optimum collusion for a short term product mix problem …. - Maximum contribution margin attainable under the given constarint 16. When specifying criteria for making a decision - Both quantitative and quality criteria should be considere 17. whiich of the following statements are true? - All except “accuulated depreciation expense is relevant if …. Sold at a loss” 18. Details reagrding a manufactured product’s components, including product subassemblies, is contained in a - Bill of materials 19. Larson enterprises ... - Decrease by 4000 20. For a two product firm that is subject to multiple resources constraints ... - Range of possible output.. 21. Relevant costs are - Future costs that... 22. For financial reporting purposes...

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