- Three of the steps in management's decision-making process are (1) review results of decision, (2) determine and evaluate possible courses of action, and (3) make the decision. The steps are prepared in the following order:(a)(1), (2), (3).(b)(3), (2), (1).(c)(2), (1), (3).(d)(2), (3), (1).
- If an unprofitable segment is eliminated:(a)net income will always increase.(b)variable costs of the eliminated segment will have to be absorbed by other segments.(c)fixed costs allocated to the eliminated segment will have to be absorbed by other segments.(d)net income will always decrease.
- In a make-or-buy decision, relevant costs are:(a)manufacturing costs that will be saved.(b)the purchase price of the units.(c)the opportunity cost.(d)All of the above.
- When a company has a limited resource, it should apply additional capacity of that resource to providing more units of the product or service that has:(a)the highest contribution margin.(b)the highest selling price.(c)the highest gross profit.(d)the highest unit contribution margin of that limited resource.
- The decision rule in a sell-or-process-further decision is: process further as long as the incremental revenue from processing exceeds:(a)incremental processing costs.(b)variable processing costs.(c)fixed processing costs.(d)No correct answer is given.
- For a retail or manufacturing company, the _________________ is the starting point for the master budget
- The cash budget is prepared ______________ the other budgets because the information generated by the other budgets dictates the expected inflows and outflows of cash
- It costs a company $14 of variable costs and $6 of fixed costs to produce product Z200. Product Z200 sells for $30. A buyer offers to purchase 3,000 units at $18 each. The seller will incur special shipping costs of $5 per unit. If the special offer is accepted and produced with unused capacity, net income will:(a)increase $3,000.(b)increase $12,000.(c)decrease $12,000.(d)decrease $3,000.
- In making business decisions, management ordinarily considers:(a)quantitative factors but not qualitative factors.(b)financial information only.(c)both financial and nonfinancial information.(d)relevant costs, opportunity cost, and sunk costs.
- Derek is performing incremental analysis in a make-or-buy decision for Item X. If Derek buys Item X, he can use its released productive capacity to produce Item Z. Derek will sell Item Z for $12,000 and incur production costs of $8,000. Derek's incremental analysis should include an opportunity cost of:(a)$12,000.(b)$8,000.(c)$4,000.(d)$0.
- It costs a company $14 of variable costs and $6 of fixed costs to produce product Z200 that sells for $30. A foreign buyer offers to purchase 3,000 units at $18 each. If the special offer is accepted and produced with unused capacity, net income will:(a)decrease $6,000.(b)increase $6,000.(c)increase $12,000.(d)increase $9,000.
- Jobart Company is currently operating at full capacity. It is considering buying a part from an outside supplier rather than making it in-house. If Jobart purchases the part, it can use the released productive capacity to generate additional income of $30,000 from producing a different product. When conducting incremental analysis in this make-or-buy decision, the company should:(a)ignore the $30,000.(b)add $30,000 to other costs in the "Make" column.(c)add $30,000 to other costs in the "Buy" column.(d)subtract $30,000 from the other costs in the "Make" column.
- Incremental analysis is the process of identifying the financial data that:(a)do not change under alternative courses of action.(b)change under alternative courses of action.(c)are mixed under alternative courses of action.(d)No correct answer is given.
- ________________ identifies long-term goals, selects strategies to achieve these goals, and develops policies and plans to implement the strategies
- T/F: The standard manufacturing overhead rate per unit is the predetermined overhead rate times the activity index quantity standard.
- Compared to budgeting, long-range planning generally has the:
- Which one of the following is not an advantage of standard costing?A) It facilitates management planning.B) It is useful in setting selling prices.C) It simplifies costing in inventories.D) It determines who is responsible for variances.
- Lower-level managers are more likely to perceive results as fair and achievable under a ________________ approach
- Budgetary control involves all but one of the following: a. Modifying future plansb. Analyzing differencesc. Using static budgetsd. Determining differences between actual and planned results
- ________________ are used as the basis for the preparation of the budgeted income statement