Download Cost information for short-run decision making focuses on a. what is

Cost information for short-run decision making focuses on
a. what is happening.
b. what will happen.
c. what happened.
d. why it happened.
Question 2
Qualitative factors used by decision makers include all of the following except
a. revenue from fees.
b. timeliness.
c. social issues.
d. competition.
Question 3
Irrelevant costs are costs that are
a. sunk costs.
b. avoidable costs.
c. opportunity costs.
d. different among alternatives.
Question 4
Estimated future costs that differ between alternative courses of action are termed __________ costs in
management decision analysis.
a. replacement
b. variable overhead
c. absorption
d. relevant
Question 5
Which of the following could not be a relevant cost in deciding whether or not to eliminate a producing
department?
a. The current residual value of the department's equipment
b. The salary of a supervisor who would be laid off
c. The carrying value of the department's equipment
d. Revenue that could be generated by renting out the department's space
Question 6
Sunk costs are omitted from decision analysis
a. always.
b. only if immaterial.
c. sometimes.
d. never.
Question 7
Contribution margin information is not relevant for
a. sales mix with resource constraint decisions.
b. the elimination of unprofitable segment decisions.
c. pricing decisions for special orders.
d. determining the amount that sales exceeded fixed costs.
Question 8
The difference in total costs between two alternatives is referred to as the
a. direct cost.
b. opportunity cost.
c. incremental cost.
d. sunk cost.
Question 9
The purpose of incremental analysis is to find the alternative
a. with the lowest fixed costs.
b. that contributes the most to profits.
c. that brings in the most revenue.
d. with the fewest relevant costs.
Question 10
The term incremental cost refers to
a. a cost that constitutes expenses to be incurred even though there is no activity.
b. the profit forgone by selecting one choice instead of another.
c. the difference in total costs between alternatives.
d. a cost that does not entail any dollar outlay but that is relevant to the decision-making process.
Question 11
Which of the following typically would be considered an incremental cost?
a. Direct product cost
b. Period cost
c. Conversion cost
d. Factory overhead cost
Question 12
In a proposal to increase the production of clock radios, the sales managers of Rinaldo Electronics
reported the total additional cost required to meet the increased production level. The increase in total
cost is known as the
a. incremental cost.
b. controllable cost.
c. out-of-pocket cost.
d. opportunity cost.
Question 13
Which of the following statements about incremental analysis is false?
a. It is based on both historical and future information relevant to the decision at hand.
b. It makes the evaluation process easier for the decision maker.
c. It focuses on the differences between alternatives.
d. It reduces the time taken to select the best course of action.
Question 14
Avoidable costs are important for
a. pricing decisions for special orders.
b. sell or process-further decisions.
c. decisions to eliminate unprofitable segments.
d. sales mix decisions.
Question 15
Products Green, Red, and White have unit contribution margins of $6.50, $12, and $10, respectively, and
require 2, 4, and 3 direct labor hours per unit, respectively. If demand currently is far exceeding supply,
on which product should the company concentrate its efforts?
a. Either Green or Red
b. White
c. Red
d. Green
Question 16
Products Uno, Dos, Tres, and Quatro have contribution margins of $2, $3, $4, and $5, respectively, and
require 1.5, 2, 2.5, and 3 machine hours per unit, respectively. Assuming that all units produced could be
sold and that total machine hours per month are limited, on which product should the company
concentrate its efforts?
a. Dos
b. Uno
c. Tres
d. Quatro
Question 17
Which of the following techniques is most useful for a special order decision?
a. Payback method
b. Incremental analysis
c. Accounting rate-of-return method
d. Present value method
Question 18
Candidates for outsourcing would include
a. custodial services.
b. payroll processing.
c. information management.
d. all of these.
Question 19
The point at which products are separated in a joint production process is the
a. split-off point.
b. joint product point.
c. separation point.
d. breakeven point.
Question 20
The costs incurred beyond the split-off point are called
a. incremental costs.
b. split-off point costs.
c. joint product costs.
d. by-product costs.