A
sunk cost ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
include costs that have been
incurred in the past and cannot be changed
·
includes future costs
·
includes the purchase price of
a vehicle a manager may trade in at the end of the period
·
YOU WERE SURE AND INCORRECT
would NOT include an irrelevant
cost of decision making
·
I DON'T KNOW YET
Which
of the following is NOT a potential drawback of outsourcing?
ANSWER
INCORRECT
·
A company must spend money to
hire more employees to manage the outsourcing process.
·
YOU WERE SURE AND INCORRECT
A manager who engages in
outsourcing loses control of the production process.
·
THE CORRECT ANSWER
Outsourcing can be a lower cost
alternative.
·
A manager who engages in
outsourcing loses control over quality and production scheduling.
·
I DON'T KNOW YET
Avoidable
fixed costs ________.
ANSWER
INCORRECT
·
refers to the result of
operating income or loss for each individual product line
·
THE CORRECT ANSWER
include costs that may be
eliminated as a result of discontinuing the product
·
YOU WERE SURE AND INCORRECT
include fixed costs that
continue to be incurred even if the product line is discontinued
·
contain NO allocation of common
fixed costs on the statement
·
I DON'T KNOW YET
Which
of the following is NOT considered when determining whether to sell or process
further?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
How much revenue will be earned
on all other product lines.
·
How much revenue will be earned
if the product is sold AFTER processing it further.
·
YOU WERE SURE AND INCORRECT
How much will it cost to
process the product further.
·
How much revenue will be earned
if the product is sold as is.
·
I DON'T KNOW YET
QUESTION
REVIEWING 5 OF 6
Page Incorporated manufactures
automotive parts that sell for $80 each. The manager reported 280 defective
parts in inventory, which cost $50 to reproduce. The manager can sell the
defective parts for $20 each, or process the parts further for $30 each, and
then sell them for the standard sales price.
Which of the following should
the managerial accountant recommend for action?
ANSWER
INCORRECT
·
Repair the defective parts for
a $16,800 net increase in operating income.
·
THE CORRECT ANSWER
Repair the defective parts for
an $8,400 net increase in operating income.
·
YOU WERE SURE AND INCORRECT
Sell the defective parts as is
for a $16,800 net decrease in operating income.
·
Sell the defective parts as is
for an $8,400 net decrease in operating income.
·
I DON'T KNOW YET
QUESTION
REVIEWING 6 OF 6
Mike’s
Auto Service reported information about the cost associated to sell as is or
process further. The managerial accountant expects to earn $200,000 of
revenue from selling parts as is.
State whether the managerial
accountant should “Process Further” or “Do Not Process” based on the Decision
Rule.
|
|
Sell As Is
|
Process Further
|
Differences:
Additional Revenue/(Costs) from Processing Further
|
|
Expected
revenue from selling parts
|
$200,000
|
|
|
|
Expected
revenue from selling processed parts
|
|
$250,000
|
$50,000
|
|
Additional
cost to remanufacture
|
|
($35,000)
|
($35,000)
|
|
Total
Net Benefit
|
$200,000
|
$215,000
|
$15,000
|
ANSWER
INCORRECT
·
Do not process further because
the extra revenue from processing further is less than the sell as is cost.
·
THE CORRECT ANSWER
Process further because the
extra revenue from processing further is more than the extra cost of processing
further.
·
YOU WERE SURE AND INCORRECT
Do not process further because
the sell as is cost is less than the process further cost.
·
Do not process further because
the extra revenue from processing further is less than extra cost of processing
further.
·
I DON'T KNOW YET
QUESTION
REVIEWING 1 OF 5
Sal’s
Manufacturing manufactures and sells couches and tables. The following data was
reported by the managerial accountant. The company can manufacture two couches
per machine hour and one table per machine hour. The company’s production
capacity is 800 machine hours per month.
What
is the contribution margin per machine hour for the couches?
|
|
Couches
|
Tables
|
|
Sales
price
|
$600
|
$580
|
|
Variable
costs
|
$350
|
$200
|
ANSWER
INCORRECT
·
$50
·
YOU WERE SURE AND INCORRECT
$5
·
$5,000
·
THE CORRECT ANSWER
$500
·
I DON'T KNOW YET
QUESTION
REVIEWING 2 OF 5
Stripes and Stars Manufacturing
produces and manufactures sweat shirts and socks. Based on the information
listed below, what is the contribution margin ratio for sweat shirts and socks?
|
|
Sweat Shirts
|
Socks
|
|
Sales
price
|
$20
|
$18
|
|
Less:
Variable expenses
|
($12)
|
($6)
|
|
Contribution
margin
|
$8
|
$12
|
|
Contribution
margin ratio:
|
|
|
|
Sweat
shirts:
|
?
|
|
|
Socks:
|
|
?
|
ANSWER
INCORRECT
·
THE CORRECT ANSWER
40%; 67%
·
YOU WERE SURE AND INCORRECT
4%; 60%
·
40%; 6.7%
·
60%; 40%
·
I DON'T KNOW YET
QUESTION
REVIEWING 2 OF 4
Unavoidable
fixed costs ________.
ANSWER
INCORRECT
·
YOU WERE SURE AND INCORRECT
include costs that may be
eliminated as a result of discontinuing the product
·
THE CORRECT ANSWER
include fixed costs that
continue to be incurred even if the product line is discontinued
·
refers to the result of
operating income or loss for each individual product line
·
contain NO allocation of common
fixed costs
·
I DON'T KNOW YET
QUESTION
REVIEWING 3 OF 4
Which
of the following is NOT considered when determining whether to sell or process
further?
ANSWER
INCORRECT
·
How much revenue will be earned
if the product is sold as is.
·
THE CORRECT ANSWER
How much revenue will be earned
on all other product lines.
·
YOU WERE SURE AND INCORRECT
How much revenue will be earned
if the product is sold AFTER processing it further.
·
How much will it cost to
process the product further.
·
I DON'T KNOW YET
QUESTION
REVIEWING 4 OF 4
A
special order should be rejected when ________.
ANSWER
INCORRECT
·
variable nonmanufacturing
expenses result from the special order costs
·
YOU WERE SURE AND INCORRECT
the price of special order is
not more than the regular sales price
·
excess capacity is available
·
THE CORRECT ANSWER
the price of the special order
is NOT more than variable costs of the order
·
I DON'T KNOW YET
QUESTION
REVIEWING 1 OF 1
Which
of the following is TRUE about relevant costs and information?
ANSWER
INCORRECT
·
A relevant cost includes costs
incurred in the past, which cannot be used in the future.
·
YOU WERE SURE AND INCORRECT
Relevant information includes
only numerical data instead of nonfinancial information.
·
A manager who uses relevant
information understands costs NEVER differ amongst the alternatives.
·
THE CORRECT ANSWER
A manager focuses only on
relevant costs and benefits, which include costs that differ amongst
alternatives and impact the future.
·
I DON'T KNOW YET
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