Cost Accounting, 14e (Horngren/Datar/Rajan) Show Objective: 1 1 4) The formal process of choosing between alternatives is known as a(n): Required machine operators Currently A) Do not change the production floor. AACSB: Analytical skills 2 Answer the following questions using the information below: Demand Currently Projected $5.00 6) If the price increase is implemented, operating profit is projected to: Diff: 2 3 9) When using the five-step decision process, which one of the following steps should be done first? B) Choose an alternative Diff: 2 4 12) The textbook discusses a five-step decision process. Briefly explain each of the five steps. necessary changes in operations to support the decision. A) are historical costs 3) Sunk costs: Objective: 2 6 7) Which of the
following costs always differ among future alternatives? Acquisition cost $ 2,280 Grand Cherokee $2,100 9) The cost NOT relevant for this decision is the: 7 10) What should John do? What are
his savings in the first year? 8 14) Quantitative factors: 9 18) Employee morale at Dos Santos, Inc., is very high. This type of information is known as a: 10 22) When there is excess capacity, it makes sense to accept a one-time-only special order for less than 11 Answer the following questions using the
information below: $80 24) What is the full cost of the product per unit? 12 26) For Kolar Manufacturing, what is the minimum acceptable price of this special order? $0.25 Current monthly sales are 18,000 units. Jim Company has contacted Ratzlaff Company about purchasing 29) Snapper Tool Company has a production capacity of 3,000 units per month, but current production $455 Heck's Kitchens has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct 14 31) Other than price, what other items should Heck's Kitchens consider before accepting this one-timeonly special order? 15 Answer the following questions using the information below: 16 36) Zephram Corporation has a plant capacity of 200,000 units per month. Unit costs at capacity are:
$4.00 Current monthly sales are 190,000 units at $30.00 each. Q, Inc., has contacted Zephram Corporation 17 39)
An example of a qualitative factor for the decision-making process is: 18 43) The best way to avoid misidentification of relevant costs is to focus on: 19 47) Which of the
following minimize the risks of outsourcing? 20 51) The incremental costs of producing one more unit of product include all of the following EXCEPT: 21 55) Smiley Face Company manufactures signs from direct materials to the finished product. This is $ 20,000 It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the 58) If Donald's Engine Company purchases 1,000 TE456 parts from the
outside supplier per month, then 23 Answer the following questions using the information below: 24 63) Relevant revenues are expected future revenues that do NOT differ among alternatives. 25 69) Sunk costs are past costs that are unavoidable. 26 75) Relevant revenues and relevant costs are the only information managers need to select among 27 80) Bid prices and costs that are relevant for regular orders are the same costs that are relevant for onetime-only special orders. 28 85) If Option 1 costs $120 and Option 2 costs $90, then the differential cost is $210. 29 91) Fluty Corporation manufactures a product that has two parts, A and B. It is currently considering Total variable manufacturing overhead, Part A Answer: 30 92) Parker and Spitzer Manufacturing is approached by a European customer to fulfill a one-time-only 31 93) Loft
Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large one-timeonly special order for a product similar to one offered to regular customers. The following per unit data 32 94) Quiett Truck manufactures part WB23 used in several of its truck models. 10,000 units are produced 33 95) Southwestern Company needs
1,000 motors in its manufacture of automobiles. It can buy the motors $ 500 If Southwestern buys the motors from Jinx, 70% of the fixed manufacturing overhead applied will not 34 96) Sarasota Bicycles has been manufacturing its own wheels for its bikes. The company is currently 35 99) Assume you are a sophomore in college and are committed to earning an undergraduate degree. How can we avoid misidentification of relevant costs?The best way to avoid misidentification of relevant costs is to focus on: Expected future costs that differ among the alternatives.
Which of the following is not true about relevant costs and relevant revenues?Costs and revenues that have already been incurred cannot be different between the alternatives and therefore they cannot be relevant. This is the correct opinion because this statement is FALSE. Sunk costs are never relevant because these costs have been incurred as a result of another decision.
Which of the following is a relevant cost to be included in a makeIn a make-or-buy decision (MBD), relevant costs include avoidable fixed costs. It is a type of fixed cost that can be avoided or is not necessarily incurred for performing a business activity. IT includes in the make-or-buy decision because these costs will not affect or change the decision as this cost can be ignored.
Which of the following costs are never relevant in the decision making process?Two broad categories of costs are never relevant in decisions: 1. Sunk costs. 2. Future costs that do not differ between alternatives.
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