(TCO 9) Which one of the following stages of the management decision-making process is properly sequenced? (Points : 4) Evaluate possible courses of action, make decision Review the actual impact of the decision, determine possible courses of action Assign responsibility for the decision, identify the problem Make a decision, assign responsibility 2. (TCO 9) When is incremental analysis most useful? (Points : 4) After a decision has been made to determine its effectiveness In choosing between capital budgeting methods In evaluating the profitability of a company In developing relevant information for management decisions 3. (TCO 9) Which of the following will never be a relevant cost? (Points : 4) Opportunity cost Sunk cost Variable cost Fixed cost 4. (TCO 9) What role does a trade-in allowance on old equipment play in a decision to retain or replace equipment? (Points : 4) It is relevant because it increases the cost of the new equipment. It is not relevant because it reduces the cost of the old equipment. It is not relevant to the decision because it does not impact the cost of the new equipment. It is relevant because it reduces the cost of the new equipment. 5. (TCO 9) It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 2,000 units at $18 each. Lannon has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income? (Points : 4) decrease $4,000 increase $4,000 increase $36,000 increase $8,000 6. (TCO 9) Wishnell Toys can make 1,000 toy robots with the following costs: Direct Materials $70,000 Direct Labor 26,000 Variable Overhead 15,000 Fixed Overhead 15,000 The company can purchase the 1,000 robots externally for $120,000. The avoidable fixed costs are $5,000 if the units are purchased externally. What is the cost savings if the company makes the robots? (Points : 4) $1,000 $5,000 $10,000 $4,000 7. (TCO 9) Whisker Clean Company spent $8,000 to produce product 89, which can be sold as is for $10,000 or processed further, incurring additional costs of $3,000, and then sold for $14,000. Which amounts are relevant to the decision about product 89? (Points : 4) $8,000, $10,000, and $14,000 $8,000, $3,000, and $14,000 $10,000, $3,000, and $14,000 $8,000, $10,000, $3,000, and $14,000 8. (TCO 8) The capital budget for the year is approved by a company's __________ (Points : 4) board of directors. capital budgeting committee. officers. stockholders. 9. (TCO 8) The capital budgeting decision depends in part on the __________ (Points : 4) availability of funds. relationships among proposed projects. risk associated with a particular project. all of the above 10. (TCO 8) If a payback period for a project is greater than its expected useful life, the __________ (Points : 4) project will always be profitable. entire initial investment will not be recovered. project would only be acceptable if the company's cost of capital was low. project's return will always exceed the company's cost of capital. 11. (TCO 8) Intangible benefits in capital budgeting __________ (Points : 4) should be ignored because they are difficult to determine. include increased quality or employee loyalty. are not considered because they are usually not relevant to the decision. have a rate of return in excess of the company