Chapter 11 test bank with answers Horngren\'s Cost Accounting: A Managerial Emphasis, 16th Global Edition PDF

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Cost Accounting: A Managerial Emphasis, 16e, Global Edition (Horngren)Chapter 11 Decision Making and Relevant Information11 Objective 11. A decision model involves a(n) ________. A) informal method of making a choice at the lower level management using sensitivity analysis B) formal method of making...

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Cost Accounting: A Managerial Emphasis, 16e, Global Edition (Horngren) Cha pt e r1 1 Dec i s i onMaki nga ndRe l e va ntI nf or ma t i on 1 1 . 1 Obj e c t i ve11 . 1 1 )Ade c i s i onmode li nvol ve sa ( n)__ _ __ _ _ _. A)i nf or ma lme t hodofma ki ngac hoi c ea tt hel owe rl e ve lma na ge me ntus i ngs e ns i t i vi t ya na l ys i s B)f or malme t hodofma ki ngac hoi c et ha tof t e ni nvol ve sbot hquant i t a t i vea ndqua l i t a t i veanal ys e s C)i nf or ma lme t hodofma ki ngac hoi c ewhi c hi sdi s c us s e di nde t a i l e di nt hefina nc i a lr e por t s D)f or ma lme t hodofma ki ngac hoi c ea tt hel owe rl e ve lma na ge me ntus i ngadva nc e dma na ge me nt t e c hni que ss uc hasba l anc es c or e c ar d Ans we r :B Di ff:1 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

2 )Fe e dba c kr e ga r di ngpr e vi ousa c t i onsma ya ffe c t__ _ __ _ __ . A)f ut ur epr e di c t i ons B)i mpl e me nt a t i onoft hede c i s i on C)t hede c i s i onmode l D)Al loft he s ea ns we r sa r ec or r e c t . Ans we r :D Di ff:2 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

3 )Pl a c et hef ol l owi ngs t e psf r om t hefive s t e pde c i s i onpr oc e s si nor de r : A= Obt a i ni nf or ma t i oni nc l udi nghi s t or i c a lc os t s B= Eva l ua t epe r f or manc et opr ovi def e e dba c k C= Makede c i s i onsc hoos i nga mongal t e r na t i ve s D= Ma kepr e di c t i onsaboutt hef ut ur e E= I de nt i f yt hepr obl e ma ndunc e r t ai nt i e s A)A,E,D, B,C B)E,A,D,B,C C)E,A,D,C,B D)D, C,B,A, E Ans we r :C Di ff:2 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

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4 )Thef or ma lpr oc e s sofc hoos i ngbe t we e nal t e r na t i ve si sknownasa( n)__ _ __ _ _ _. A)r e l e va ntmode l B)de c i s i onmode l C)a l t e r na t i vemode l D)pr e di c t i onmode l Ans we r :B Di ff:1 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

5 )Fl a s hCi t yI nc .ma nuf a c t ur e ss ma l lflas hdr i ve sa ndi sc ons i de r i ngr a i s i ngt hepr i c eby75c e nt sauni tf or t hec omi ngye a r .Wi t ha75 c e ntpr i c ei nc r e a s e ,de ma ndi se xpe c t e dt of a l lby7 , 0 00uni t s .

De ma nd Se l l i ngpr i c e I nc r e me nt alc os tpe runi t

Cur r e nt 7 9 , 00 0uni t s $ 8 . 50 $ 5 . 80

Pr oj e c t e d 7 2 , 00 0uni t s $ 9 . 25 $ 5 . 80

I ft hepr i c ei nc r e a s ei si mpl e me nt e d, ope r a t i ngpr ofiti spr oj e c t e dt o_ _ __ _ __ _ . A)i nc r e as eby$ 3 5, 10 0 B)de c r e a s eby$5 , 2 5 0 C)i nc r e as eby$5 , 2 5 0 D)de c r e a s eby$7 , 0 00 Ans we r :A Expl a na t i on:Changei nope r a t i ngi nc ome=[ 7 2, 00 0×( $9 . 2 5-$5 . 8 0) ]-[ 79 , 0 0 0×( $8 . 5 0-$5 . 8 0) ]=I nc r e a s e of$3 5 , 10 0 Di ff:2 Obj e c t i ve :1 AACSB:Appl i c a t i onofknowl e dge

6 )Fl a s hCi t yI nc .ma nuf a c t ur e ss ma l lflas hdr i ve sa ndi sc ons i de r i ngr a i s i ngt hepr i c eby75c e nt sauni tf or t hec omi ngye a r .Wi t ha75 c e ntpr i c ei nc r e a s e ,de ma ndi se xpe c t e dt of a l lby7 , 0 00uni t s .

De ma nd Se l l i ngpr i c e I nc r e me nt alc os tpe runi t

Cur r e nt 7 8 , 00 0uni t s $ 9 . 00 $ 6 . 80

Pr oj e c t e d 7 1 , 00 0uni t s $ 9 . 75 $ 6 . 80

Woul dyour e c omme ndt he75 c e ntpr i c ei nc r e a s e ? A)No ,be c aus ede mandde c r e as e d. B)No , be c aus et hes e l l i ngpr i c ei nc r e as e s . C)Ye s ,be c a us ec ont r i but i onma r gi npe runi ti nc r e a s e s . D)Ye s ,be c a us eope r a t i ngpr ofit si nc r e a s e . Ans we r :D Di ff:2 Obj e c t i ve :1 AACSB:Appl i c a t i onofknowl e dge

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7 )Whe nus i ngt hefive s t e pde c i s i onpr oc e s s ,whi c honeoft hef ol l owi ngs t e pss houl dbedonel a s t ? A)obt ai ni nf or ma t i on B)c hoos ea na l t e r na t i ve C)e val ua t i onandf e e dbac k D)i mpl e me nt i ngt hede c i s i on Ans we r :C Di ff:2 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

8 )Whe nus i ngt hefive s t e pde c i s i onpr oc e s s ,whi c honeoft hef ol l owi ngs t e pss houl dbedonefir s t ? A)obt ai ni nf or ma t i on B)c hoos ea na l t e r na t i ve C)e val ua t i on andf e e dbac k D)i mpl e me nt i ngt hede c i s i on Ans we r :A Di ff:2 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

9 )A de c i s i onmode li sa ni nf or malme t hodf ormaki ngac hoi c e ,us i ngs i mpl e rme t hodsl i kes ur ve yi ng. Ans we r :F ALSE Expl a na t i on:Ade c i s i onmode li saf or ma lme t hodofma ki ngac hoi c et ha tof t e ni nvol ve sbot h quant i t a t i vea ndqua l i t a t i veanal ys e s . Di ff:1 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

1 0 )Fe e dba c kf r om pr e vi ousde c i s i onsus e shi s t or i c ali nf or ma t i onand, t he r e f or e ,i si r r e l e va ntf orma ki ng f ut ur epr e di c t i ons . Ans we r :F ALSE Expl a na t i on:Hi s t or i c alc os t sma ybehe l pf uli nma ki ngf ut ur epr e di c t i ons ,buta r enotr e l e vantc os t sf or de c i s i onma ki ng. Di ff:1 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

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1 1 )Expl ai nt hefive s t e pde c i s i onpr oc e s st ha tmana ge r sc a nus et oma kede c i s i ons . Ans we r :Thefives t e pde c i s i onpr oc e s si s( a )I de nt i f yt hepr obl e m andunc e r t a i nt i e s ,( b)Obt ai n i nf or ma t i on, ( c )Ma kepr e di c t i ons ,( d)Ma kede c i s i onsbyc hoos i nga monga l t e r na t i ve s ,and( e )I mpl e me nt t hede c i s i on,e va l ua t epe r f or manc et opr ovi def e e dbac k. I de nt i f yi ngt hepr obl e m andunc e r t a i nt i e si nvol ve sfindi ngr i s ks ,unc e r t ai nt i e s ,orot he rf ai l ur e sas s oc i a t e d wi t habus i ne s swhi c hwi l laffe c tt hei nt e r nala nde xt e r nalpr os pe c t soft hefir m. Obt ai ni ngi nf or ma t i oni nvol ve sc ol l e c t i nga l lda t ape r t i ne ntt ot hede c i s i ons i t ua t i on,bot hqua nt i t a t i ve a ndqual i t a t i ve ,andde t e r mi ni ngwhi c hi nf or ma t i oni sr e l e vantt ot hede c i s i on,a ndde t e r mi ni ngwhi c h a l t e r na t i ve sar ebe i ngc ons i de r e d. Maki ngpr e di c t i onsi nvol ve sus i ngt hei nf or ma t i onobt a i ne da boveanda t t e mpt i ngt opr e di c twha tt he f ut ur ec os t sa ndbe ne fit swi l lbef ore a c hoft hevar i ousa l t e r na t i ve s . Choos i nga nal t e r na t i vei nvol ve sc ompa r i ngt hepr e di c t e dbe ne fit sofe a c ha l t e r na t i vewi t he ac hoft he pr e di c t e dc os t s( a swe l lasot he rnonquant i t a t i vef a c t or s ) ,ands e l e c t i nga nal t e r na t i vet ha tma xi mi ze st he di ffe r e nc ebe t we e nt hee xpe c t e dbe ne fit sa ndt hee xpe c t e dc os t s . I mpl e me nt i ngt hede c i s i oni nvol ve sac t ual l ydoi ngt heal t e r na t i ves e l e c t e da boveandmaki ngal lt he ne c e s s ar yc hange si nope r a t i onst os uppor tt hede c i s i on.Eva l ua t i ngt hepe r f or ma nc eoft hede c i s i on i nvol ve sl e a r ni ngf r om t her e s ul t soft hede c i s i ona nds e e i ngwhi c hpr e di c t i onswe r eac c ur a t ea nd de t e r mi ni ngho wt oa voi da nydi ffic ul t i e se nc ount e r e di ne i t he rt hede c i s i onpr oc e s sort he i mpl e me nt a t i on. Di ff:2 Obj e c t i ve :1 AACSB:Ana l yt i c alt hi nki ng

1 1 . 2 Obj e c t i ve1 1. 2 1 )Whi c hoft hef ol l owi ngi snott r uewi t hr e ga r dst or e l e vantc os t sa ndr e l e vantr e ve nue s ? A)The ya r es unkc os t sa ndhi s t or i c a lr e ve nue s B)The ya r ee xpe c t e dc os t sa nde xpe c t e dr e ve nue s C)The yoc c uri nt hef ut ur e D)Thedi ffe ramongal t e r na t i vec our s e sofa c t i on Ans we r :A Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

2 )Sunkc os t s_ __ _ _ __ _ . A)a r ef ut ur ec os t sf orde c i s i onma ki ng B)ar ea voi dabl ec os t s C)a r ei r r e l e va ntf orde c i s i onma ki ng D)ar ef or e gonec ont r i but i onbynotus i ngal i mi t e dr e s our c ei ni t sne x t be s ta l t e r na t i veus e Ans we r :C Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

3 )Sunkc os t s_ __ _ _ __ _ . A)a r er e l e vant B)ar edi ffe r e nt i al C)ha vef ut ur ei mpl i c a t i ons D)ar ei gnor e dwhe ne val ua t i ngal t e r na t i ve s 4 Copyright © 2018 Pearson Education, Ltd.

Ans we r :D Di ff:1 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

4 )Whi c hoft hef ol l owi ngi sane xa mpl eofs unkc os t s ? A)wa ge st os e c ur i t ys t a ffs B)c os tofpur c has i ngr a w ma t e r i al s C)c os tofana l t e r na t i vei nve s t me nt D)wa ge spa ya bl et os ki l l e dl a bor e r st oma keapr oduc t Ans we r :A Di ff:1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

5 )Sunkc os t sa r e_ _ __ _ __ _ . A)c os t si nc ur r e da sar e s ul tofa ni nve s t me ntpos i t i on B)c os t st ha ti st hes um ofa l lc os t si napar t i c ul a rbus i ne s sf unc t i onoft heval uec ha i n C)t hec ont r i but i onst oope r a t i ngi nc omet ha ti sf or goneb ynotus i ngal i mi t e dr e s our c ei ni t sne x t be s t a l t e r na t i veus e D)c os t st ha tar euna voi da bl eandc a nnotbec ha nge dnoma t t e rwha ta c t i oni st a ke n Ans we r :D Di ff:1 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

6 )I ne va l ua t i ngdi ffe r e nta l t e r na t i ve s ,i ti sus e f ult oc onc e nt r a t eon__ _ _ __ _ _. A)va r i a bl ec os t s B)fix e dc os t s C)t ot a lc os t s D)r e l e va ntc os t s Ans we r :D Di ff:1 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

7 )Whi c hoft hef ol l owi ngc os t sa l wa ysdi ffe ra mongf ut ur eal t e r na t i ve s ? A)fix e dc os t s B)hi s t or i c a lc os t s C)r e l e vantc os t s D)var i abl ec os t s Ans we r :C Di ff:1 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

8 )Ma na ge me nti sc ons i de r i ngt woal t e r na t i ve s .Al t e r na t i veAha spr oj e c t e dr e ve nuepe rye a rof$ 10 0 , 00 0 a ndc os t sof$ 7 0, 0 0 0whi l eAl t e r na t i veBha sr e ve nueof$ 10 0 , 00 0a ndc os t sof$6 0 , 00 0 .Bot hpr oj e c t s r e qui r ea ni ni t i a li nve s t me ntof$ 25 0 , 00 0ofwhi c h$ 75 , 0 0 0ha sal r e a dybe e ns e tas i dea ndwi l lbeus e da sa downpa yme ntont hepr oj e c tt ha ti sc hos e n.The r ear ea l s oot he rqua l i t a t i vef ac t or st ha tmana ge me nt mus tc ons i de rbe f or emaki ngafina lc hoi c e .Whi c hoft hef ol l owi ngs t a t e me nt si sc or r e c taboutr e l e va nt c os t sandr e l e vantr e ve nue s . A)Thes unkc os tof$7 5 , 00 0i sr e l e va nt B)Thepr oj e c t e dr e ve nue sa r er e l e vantt ot hede c i s i on C)Thei ni t i a li nve s t me ntof$ 25 0 , 00 0 ,t hepr oj e c t e dr e ve nue s ,a ndt hepr oj e c t e dc os t sa r ea l lr e l e vant D)Theonl yr e l e va nti t e ma r et hec os t sa st he ydi ffe rbe t we e nal t e r na t i ve s 5 Copyright © 2018 Pearson Education, Ltd.

Ans we r :D Di ff:1 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

9 )J ohn' s8ye ar ol dChe vr ol e tTr ai lBl a ze rr e qui r e sr e pa i r se s t i ma t e da t$1 0 , 00 0t oma kei tr oa dwor t hy a ga i n.Hi swi f e ,S he r r y ,s ugge s t e dt ha thes houl dbuya5 ye a r ol dus e dJ e e pGr a ndChe r oke ei ns t e a df or $ 1 0, 0 0 0c a s h.She r r ye s t i ma t e dt hef ol l owi ngc os t sf ort het woc ar s :

Ac qui s i t i onc os t Re pa i r s Annualope r a t i ngc os t s ( Ga s ,ma i nt e na nc e ,i ns ur anc e )

Tr ai lBl az e r Gr a ndCher oke e $ 2 5, 0 0 0 $ 1 0, 0 0 0 $ 1 0, 0 0 0 — $ 2 , 78 0

$ 1 , 80 0

Thec os tNOTr e l e va ntf ort hi sde c i s i oni st he__ _ _ __ _ _. A)a c qui s i t i onc os toft heTr ai lBl a ze r B)ac qui s i t i onc os toft heGr a ndChe r oke e C)r e pai r st ot heTr ai lBl az e r D)annualope r a t i ngc os t soft heGr a ndChe r oke e Ans we r :A Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

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1 0 )J ohn' s8ye a r ol dChe vr ol e tTr ai lBl a ze rr e qui r e sr e pa i r se s t i ma t e da t$7 , 0 0 0t omakei tr oa dwor t hy a ga i n.Hi swi f e ,S he r r y ,s ugge s t e dt ha thes houl dbuya5 ye a r ol dus e dJ e e pGr a ndChe r oke ei ns t e a df or $ 7 , 00 0c a s h.She r r ye s t i ma t e dt hef ol l owi ngc os t sf ort het woc a r s :

Ac qui s i t i onc os t Re pa i r s Annualope r a t i ngc os t s ( Ga s ,ma i nt e na nc e ,i ns ur anc e )

Tr ai lBl az e r Gr a ndCher oke e $ 3 0, 0 0 0 $ 7, 0 0 0 $ 7 , 00 0 — $ 2 , 58 0

$ 1 , 70 0

Wha ts houl dJ ohndo?Wha tar ehi ss a vi ngsi nt hefir s tye a r ? A)Buyt heGr a ndChe r oke e ;$ 8, 70 0 B)Fi xt heTr ai lBl a ze r ;$4 , 3 8 0 C)Buyt heGr a ndChe r oke e ;$8 8 0 D)Fi xt heTr a i lBl a ze r ;$ 7, 24 7 Ans we r :C Expl a na t i on:Tr a i lBl az e r( $7 , 0 00+$ 2, 58 0 )-Gr a ndChe r oke e( $7 , 0 00+$ 1, 70 0 )=$8 8 0c os ts a vi ngswhe n c hoos i ngt heGr a ndChe r oke eopt i on Di ff:2 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

1 1 )A r e l e vantr e ve nuei sr e ve nuet ha ti sa( n)__ _ __ _ _ _. A)pa s tr e ve nueanddi ffe r sa monga l t e r na t i vec our s e sofa c t i on B)f ut ur er e ve nuea nddi ffe r samonga l t e r na t i vec our s e sofac t i on C)i nha ndr e ve nue D)e a r ne dr e ve nue Ans we r :B Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

1 2 )A r e l e vantc os ti sac os tt ha ti sa ( n)_ __ _ _ __ _ . A)f ut ur ec os t B)pa s tc os t C)s unkc os t D)nonc as he xpe ns e Ans we r :A Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

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1 3 )Whi c hoft hef ol l owi ngi st r ueofr e l e va nti nf or ma t i on? A)Al lfix e dc os t sar er e l e vant . B)Al lFut ur er e ve nue sa nde xpe ns e sa r er e l e va nt . C)Fut ur e D)Al lfix e dc os t sar enotr e l e va nt . Ans we r :C Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

1 4 )Quant i t a t i vef a c t or s__ _ __ _ __ . A)i nc l udefina nc i a li nf or ma t i on, butnotnonfina nc i a li nf or ma t i on B)i nc l udebot hfinanc i a la ndnonfinanc i a li nf or ma t i on C)a r ea l wa ysr e l e vantwhe nmaki ngde c i s i ons D)i nc l udee mpl o ye emor a l e Ans we r :B Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

1 5 )Al loft hef ol l owi nga r ee xa mpl e sofquant i t a t i vef ac t or se x c e pt : A)c os tofdi r e c tma t e r i a l s B)budge tf ormar ke t i nga c t i vi t i e s C)pr oduc tde ve l opme ntt i me D)e mpl oye emor a l e Ans we r :D Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

1 6 )Whi c hoft hef ol l owi ngi st r ueofhi s t or i c a lc os t s ? A)The ya r eus e f ulf ormaki ngf ut ur epr e di c t i ons . B)The ya r er e l e vantf orde c i s i onma ki ng. C)The ya r ea l wa ysac c ount e dasoppor t uni t yc os t s . D)The yc annotbefix e dc os t s . Ans we r :A Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

1 7 )Whe nmaki ngde c i s i ons__ _ _ __ _ _. A)qua l i t a t i vef a c t or sar enotr e l e vanta st he yc an' tbequant i fie d B)mor ewe i ghts houl dbegi ve nt oqua nt i t a t i vef a c t or s C)a ppr opr i a t ewe i ghtmus tbegi ve nt obot hquant i t a t i vea ndqua l i t a t i vef a c t or s D)qua nt i t a t i vef a c t or sar er e l e va ntbutqual i t a t i vef a c t or sa r er a r e l yr e l e vant Ans we r :C Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

1 8 )Empl oye emor al ea tDosSa nt os ,I nc . ,i sve r yhi gh. Thi st ypeofi nf or ma t i oni sa ne x ampl eof__ _ __ _ __ . A)qua l i t a t i vef a c t or s B)qua nt i t a t i vef a c t or s C)i r r e l e vantf ac t or s D)fina nc i a lf ac t or s Ans we r :A 8 Copyright © 2018 Pearson Education, Ltd.

Di ff:1 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

1 9 )Eac hoft hef ol l owi ngar et r ueofr e l e va nti nf or ma t i one x c e pt : A)Pa s tc os t sar ehe l pf ulwhe nma ki ngpr e di c t i onsbutnotr e l e va ntwhe nma ki ngde c i s i ons B)Di ffe r e nta l t e r na t i ve sc a nbec ompa r e dbye x ami ni ngdi ffe r e nc e si ne xpe c t e df ut ur er e ve nue sand e xpe c t e dt ot a lf ut ur ec os t s C)s i gni fic a ntpa s ti nve s t me ntamount sar er e l e vantt ode c i s i onmaki ng D)No tal lf ut ur er e ve nue sande xpe ns e sar er e l e vant Ans we r :C Di ff:1 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

2 0 )One t i me onl ys pe c i alor de r ss houl donl ybea c c e pt e di f__ _ __ _ _ _. A)i nc r e me nt alr e ve nue se x c e e di nc r e me nt alc os t s B)di ffe r e nt i a lr e ve nue se x c e e dva r i a bl ec os t s C)i nc r e me nt a lr e ve nue se x c e e dfix e dc os t s D)t ot alr e ve nue se x c e e dt ot a lc os t s Ans we r :A Di ff:3 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

2 1 )Whe nde c i di ngt oa c c e ptaone t i me onl ys pe c i a lor de rf r om awhol e s al e r ,mana ge me nts houl d _ _ __ _ __ _ . A)c ons i de rt hes unkc os t sandoppor t uni t yc os t s B)notc ons i de rt hes pe c i alor de r ' si mpac tonf ut ur epr i c e soft he i rpr oduc t s C)de t e r mi newhe t he re x c e s sc apa c i t yi sa va i l abl e D)ve r i f ypas tde s i gnc os t sf ort hepr oduc t Ans we r :C Di ff:3 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

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2 2 )Whe nt he r ei sane x c e s sc apa c i t y ,i tma ke ss e ns et oac c e ptaone t i me onl ys pe c i a lor de rf orl e s st ha n t hec ur r e nts e l l i ngpr i c ei f__ _ _ __ _ _. A)i nc r e me nt alr e ve nue se x c e e di nc r e me nt alc os t s B)addi t i ona lfix e dc os t si si nc ur r e dt oa c c ommoda t et heor de r C)t hec ompa nypl a c i ngt heor de ri si nt hes amemar ke ts e gme nta syourc ur r e ntc us t ome r s D)i nc r e me nt a lr e ve nuee qual si nc r e me nt a lope r a t i ngi nc ome Ans we r :A Di ff:3 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

2 3 )A pr oduc tc os ti sc ompos e doft hef ol l owi ng: Di r e c tma t e r i a l s Di r e c tl a bor Manuf ac t ur i ngove r he a d

$ 1 1 $ 3 $ 8

Thepr oduc ts e l l sf or$ 40a nda1 5% c ommi s s i oni spa i dt oas al e s pe r s onf ore ve r yuni ts ol d.Mana ge me nt a c c ount ant sa l s oe s t i ma t et ha ts t or a gec os tpe runi ta ve r a ge s$0 . 7 5pe runi t .Wha ti st hef ul lc os toft he pr oduc t ? A)$ 14 B)$2 2 C)$ 28 . 7 5 D)$2 8 . 0 0 Ans we r :C Expl a na t i on:$ 1 1+$ 3+$8+( $ 40x15 %)+$ 0 . 75=$ 2 8. 7 5 Di ff:2 Obj e c t i ve :2 AACSB:Ana l yt i c alt hi nki ng

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2 4 )Cr a ndl eMa nuf a c t ur e r sI nc .i sappr oa c he dbyapot e nt i a lc us t ome rt of ul fil laone t i me onl ys pe c i a l or de rf orapr oduc ts i mi l art ooneoffe r e dt odome s t i cc us t ome r s .Thec ompa nyhase x c e s sc apa c i t y .The f ol l owi ngpe runi tda t aappl yf ors a l e st or e gul arc us t ome r s : Va r i a b l ec o s t s : Di r e c tma t e r i a l s Di r e c tl a bor Manuf ac t ur i ngs uppor t Mar ke t i ngc os t s Fi x e dc o s t s : Manuf ac t ur i ngs uppor t Mar ke t i ngc os t s Tot alc os t s Mar kup( 5 0%) Ta r ge t e ds e l l i ngpr i c e

$ 1 30 1 1 0 1 2 5 6 5 1 7 5 8 5 6 9 0 3 4 5 $ 1 , 03 5

Wha ti st hef ul lc os toft hepr oduc tpe runi t ? A)$ 43 0 B)$1 , 0 3 5 C)$ 69 0 D)$3 4 5 Ans we r :C Expl a na t i on:Ful lc os t=$1 3 0+$1 1 0+$ 1 25+$ 6 5+$ 1 75+$ 85=$ 69 0 Di ff:3 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

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2 5 )Cr a ndl eMa nuf a c t ur e r sI nc .i sappr oa c he dbyapot e nt i a lne wc us t ome rt of ul fil laone t i me onl y s pe c i a lor de rf orapr oduc ts i mi l art ooneoffe r e dt odome s t i cc us t ome r s .Thec ompa nyhase x c e s sc apa c i t y . Thef ol l owi ngpe runi tda t aappl yf ors al e st or e gul arc us t ome r s : Va r i a b l ec o s t s : Di r e c tma t e r i a l s Di r e c tl a bor Manuf ac t ur i ngs uppor t Mar ke t i ngc os t s Fi x e dc ...