1. Define the term constraints and give an example. What product should be made first when resource constraints exist?

2. True or false. When deciding whether to accept a special order, managers need to consider whether they have available excess capacity.

3. True or false. Cost-plus price minus desired profit equals total cost.

4. True or false. Variable costs are irrelevant to a special decision when those variable costs differ between alternatives.

5. True or false. Companies operating in highly competitive industries are generally price-setters.

6. The benefit foregone by choosing a particular alternative course of action is referred to as a(n)

a. incremental cost.

b.	opportunity cost.

c.	variable cost.

d.	sunk cost.

7. A company's manager would consider which of the following in deciding whether to discontinue its electronics product line?

a. How discontinuing the electronics product line would affect sales of its other products (like CDs)

b.	The costs it could save by discontinuing the product line

c.	The revenues it would lose from discontinuing the product line

d.	All of the above

8. The factor that restricts production or sale of a product is which of the following?

a.	Demanding factor

b.	Relevant factor

c.	Constraint

d.	Sunk factor

9. The cost-plus price is described by which of the following?

a. Total cost plus desired profit

b.	Revenue at market price plus desired profit

c.	Variable cost plus desired profit

d.	Target total cost plus desired profit

10. Which of the following describes the products and services of companies that are price-setters?

a. They tend to be commodities.

b.	They are priced by managers using a target-costing emphasis.

c.	They tend to have a lot of competitors.

d.	They tend to be unique.