QUESTION 1

1. A decision in which a manager needs to determine whether a product line (or segment) should continue or be eliminated is what kind of decision?
2. relevantmake-or-buysell-or-process-furtherspecial-orderkeep-or-drop

5 points

QUESTION 2

1. A decision involving a choice between internal and external production is what kind of decision?
2. relevantkeep-or-dropsell-or-process-furtherspecial-ordermake-or-buy

5 points

QUESTION 3

1. A decision that focuses on whether a specially priced order should be accepted or rejected is what kind of decision?
2. relevantmake-or-buysell-or-process-furtherspecial-orderkeep-or-drop

5 points

QUESTION 4

1. A decision that involves potential further processing of joint products is which kind of decision?
2. relevantmake-or-buysell-or-process-furtherspecial-orderkeep-or-drop

5 points

QUESTION 5

1. An important qualitative factor to consider regarding a special order is the
2. variable costs associated with the special order.avoidable fixed costs associated with the special order.effect the sale of special-order units will have on the sale of regularly priced units.incremental revenue from the special order.

5 points

QUESTION 6

1. Boone Products had the following unit costs:
3. Direct materials$24
4. Direct labor10
5. Variable overhead8
6. Fixed factory (allocated)18
8. A one-time customer has offered to buy 2,000 units at a special price of $48 per unit. Because of capacity constraints, 1,000 units will need to be produced during overtime. Overtime premium is $8 per unit. How much additional profit or loss will be generated by accepting the special order?
9. $30,000 loss$4,000 loss$24,000 loss$4,000 profit

5 points

QUESTION 7

1. Figure 13-1.
2. Fuller Company makes frames. A customer wants to place a special order for 600 frames in green with the company logo painted on the frame, to be priced at $40 each. Normally, Fuller would charge $90 per frame for this type of order. Fuller figures that wood and glass will cost $16 per frame, variable overhead (machining, electricity) is $4 per frame, direct labor is $12 per frame, and one setup will be required at $1,000 per setup. The set-up charge costs are 100% labor. Currently, the workers needed to set up for and make the frames are working at Fuller. Their wages will be paid whether or not the special order is accepted. Fuller's policy is to avoid layoffs to the extent possible.
4. Refer to Figure 13-1. Which costs of the special order relate to flexible resources?
5. wood and glasswood, glass, and variable overheaddepreciation on machinerywood, glass, and direct laborwood, glass, direct labor, and setup labor

5 points

QUESTION 8

1. Figure 13-1.
2. Fuller Company makes frames. A customer wants to place a special order for 600 frames in green with the company logo painted on the frame, to be priced at $40 each. Normally, Fuller would charge $90 per frame for this type of order. Fuller figures that wood and glass will cost $16 per frame, variable overhead (machining, electricity) is $4 per frame, direct labor is $12 per frame, and one setup will be required at $1,000 per setup. The set-up charge costs are 100% labor. Currently, the workers needed to set up for and make the frames are working at Fuller. Their wages will be paid whether or not the special order is accepted. Fuller's policy is to avoid layoffs to the extent possible.
4. Refer to Figure 13-1. Which of the following is a qualitative factor that Fuller would consider in making the decision to accept or reject the special order?
5. cost of yarn and backingcost of setup laborthe no-layoff policythe use of machinerythe machining and electricity

5 points

QUESTION 9

1. Figure 13-1.
2. Fuller Company makes frames. A customer wants to place a special order for 600 frames in green with the company logo painted on the frame, to be priced at $40 each. Normally, Fuller would charge $90 per frame for this type of order. Fuller figures that wood and glass will cost $16 per frame, variable overhead (machining, electricity) is $4 per frame, direct labor is $12 per frame, and one setup will be required at $1,000 per setup. The set-up charge costs are 100% labor. Currently, the workers needed to set up for and make the frames are working at Fuller. Their wages will be paid whether or not the special order is accepted. Fuller's policy is to avoid layoffs to the extent possible.
4. Refer to Figure 13-1. Which of the following isirrelevantto the special order decision?
5. cost of wood and glassdirect labor costmachining and electricity cost$40 priceAll of these are relevant.

5 points

QUESTION 10

1. Figure 13-1.
2. Fuller Company makes frames. A customer wants to place a special order for 600 frames in green with the company logo painted on the frame, to be priced at $40 each. Normally, Fuller would charge $90 per frame for this type of order. Fuller figures that wood and glass will cost $16 per frame, variable overhead (machining, electricity) is $4 per frame, direct labor is $12 per frame, and one setup will be required at $1,000 per setup. The set-up charge costs are 100% labor. Currently, the workers needed to set up for and make the frames are working at Fuller. Their wages will be paid whether or not the special order is accepted. Fuller's policy is to avoid layoffs to the extent possible.
4. Refer to Figure 13-1. If Fuller accepts the special order, by how much will operating income increase or decrease?
5. $14,400 increase$12,000 decrease$12,000 increase$21,600 increaseThere will be no effect on operating income.

5 points

QUESTION 11

1. Figure 13-2.
2. ColorPro uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are:
4. Direct materials$8
5. Direct labor2
6. Variable overhead1
7. Fixed overhead4
9. ColorPro uses 100,000 units of 87A per year. Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12. Fixed overhead is unavoidable.
11. Refer to Figure 13-2. Should ColorPro make or buy the part?
12. Make the part because it will save $100,000 over buying it.Buy the part because it will save $100,000 over making it.Make the part because it will save $1,100,000 over buying it.Buy the part because it will save 1,100,000 over making it.Buy the part because it will save $300,000 over making it.

5 points

QUESTION 12

1. Figure 13-2.
2. ColorPro uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are:
4. Direct materials$8
5. Direct labor2
6. Variable overhead1
7. Fixed overhead4
9. ColorPro uses 100,000 units of 87A per year. Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12. Fixed overhead is unavoidable.
11. Refer to Figure 13-2. Which of the following is a qualitative factor that might affect ColorPro's decision?
12. Filbert has an outstanding reputation for quality.Ordering from Filbert would give ColorPro a chance to see how well Filbert could meet JIT standards for ColorPro's other products.Filbert is known for the reliability of its products.Making the part in-house would help ColorPro avoid layoffs of direct and indirect labor.All of these.

5 points

QUESTION 13

1. Figure 13-6.
2. Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals-dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons of dac and 3,000 gallons of tyl at a total joint processing cost of $12,000. At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon. Autry has just learned of a new process to convert dac into prodac. The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac. Prodac sells for $5 per gallon.
4. Refer to Figure 13-6. What is Autry's profit from refining one batch of dactylyte if both dac and tyl are sold at the split-off point?
5. $6,000$12,000$7,000$18,000$15,000

5 points

QUESTION 14

1. Figure 13-6.
2. Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals-dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons of dac and 3,000 gallons of tyl at a total joint processing cost of $12,000. At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon. Autry has just learned of a new process to convert dac into prodac. The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac. Prodac sells for $5 per gallon.
4. Refer to Figure 13-6. Should Autry process dac further?
5. No, income will be $1,500 lower.No, income will be $5,000 lower.Yes, income will be $1,500 higher.Yes, income will be $5,000 higher.It doesn't matter; income will be the same.

5 points

QUESTION 15

1. The act of choosing among alternatives with an immediate or limited end in view is termed
2. assessing feasible alternative.strategic decision making.constructing a decision model.short-run decision making.None of these.

5 points

QUESTION 16

1. The operations of Smits Corporation are divided into the Child Division and the Jackson Division. Projections for the next year are as follows:
3. Child
4. Jackson
5. Division
6. Division
7. Total
8. Sales revenue$250,000
9. $180,000
10. $430,000
11. Variable expenses90,000
12. 100,000
13. 190,000
14. Contribution margin$160,000
15. $80,000
16. $240,000
17. Direct fixed expenses75,000
18. 62,500
19. 137,500
20. Segment margin$ 85,000
21. $17,500
22. $102,500
23. Allocated common costs35,000
24. 27,500
25. 62,500
26. Total relevant benefit (loss)$50,000
27. $(10,000)
28. $40,000
30. Operating income for Smits Corporation as a whole if the Jackson Division were dropped would be
31. $22,500.$40,000.$50,000.$60,000.

5 points

QUESTION 17

1. When managers are considering the optimal product mix, they are most concerned with
2. maximizing revenue.minimizing cost.maximizing profit.minimizing selling and administrative expense.balancing productive capacity.

5 points

QUESTION 18

1. Which of the following costs isnotrelevant to a decision to sell a product at split-off or process the product further and then sell the product?
2. joint costs allocated to the productthe selling price of the product at split-offthe additional processing costs after split-offthe selling price of the product after further processing

5 points

QUESTION 19

1. Which of the following isnota step in the decision-making model?
2. define the problemidentify alternativesconsider qualitative factorstotal relevant costs and benefits for each alternativedetermine costs and benefits for both feasible and unfeasible alternatives

5 points

QUESTION 20

1. Limited resources and limited demand for a product are generally referred to as
2. resources.problems.constraints.optima.contribution factors.