Place the following steps from the five-step decision process in order:….

Place the following steps from the
five-step decision process in order:
A = Make predictions about future costs
B = Evaluate performance to provide feedback
C = Implement the decision
D = Choose an alternative

A) D C A B
B) C D A B
C) A D C B
D) D C B A

The formal process of choosing between
alternatives is known as a(n):

A) relevant model
B) decision model
C) alternative model
D) prediction model

When using the five-step decision
process, which one of the following steps should be done last?

A) Obtain information
B) Choose an alternative
C) Evaluation and feedback
D) Implementing the decision

When using the five-step decision process,
which one of the following steps should be done first?

A) Obtain information
B) Choose an alternative
C) Evaluation and feedback
D) Implementing the decision

For decision making, a listing of the
relevant costs:

A) will help the decision maker concentrate on the pertinent data
B) will only include future costs
C) will only include costs that differ among alternatives
D) All of these answers are correct.

Sunk costs:

A) are future costs
B) are past costs
C) have future implications
D) are relevant to all decisions

Sunk costs:

A) are relevant
B) are differential
C) have future implications
D) are ignored when evaluating alternatives

A computer system installed last year
is an example of a(n):

A) sunk cost
B) relevant cost
C) differential cost
D) avoidable cost

Costs that CANNOT be changed by any
decision made now or in the future are:

A) fixed costs
B) indirect costs
C) avoidable costs
D) sunk costs

In evaluating different alternatives,
it is useful to concentrate on:

A) variable costs
B) fixed costs
C) total costs
D) relevant costs

Which of the following costs always
differ among future alternatives?

A) fixed costs
B) historical costs
C) relevant costs
D) variable costs

Which of the following costs are never
relevant in the decision-making process?

A) fixed costs
B) historical costs
C) relevant costs
D) variable costs

A relevant revenue is a revenue that is
a(n):

A) past revenue
B) future revenue
C) in-hand revenue
D) earned revenue

A relevant cost is a cost that is a
(n):

A) future cost
B) past cost
C) sunk cost
D) non-cash expense

Relevant information has all of these
characteristics EXCEPT:

A) past costs are irrelevant
B) all future revenues and expenses are relevant
C) different alternatives can be compared by examining differences in total
revenue and expenses
D) qualitative factors should be considered

Quantitative factors:

A) include financial information, but not nonfinancial information
B) can be expressed in monetary terms
C) are always relevant when making decisions
D) include employee morale

Qualitative factors:

A) generally are easily measured in quantitative terms
B) are generally irrelevant for decision making
C) may include either financial or nonfinancial information
D) include customer satisfaction

Historical costs are helpful:

A) for making future predictions
B) for decision making
C) because they are quantitative
D) None of these answers is correct.

When making decisions:

A) quantitative factors are the most important
B) qualitative factors are the most important
C) appropriate weight must be given to both quantitative and qualitative
factors
D) both quantitative and qualitative factors are unimportant

Employee morale at Dos Santos, Inc., is
very high. This type of information is known as a:

A) qualitative factor
B) quantitative factor
C) nonmeasurable factor
D) financial factor

Roberto owns a small body shop. His
major costs include labor, parts, and rent. In the decision-making process,
these costs are considered to be:

A) fixed
B) qualitative factors
C) quantitative factors
D) variable

One-time-only special orders should
only be accepted if:

A) incremental revenues exceed incremental costs
B) differential revenues exceed variable costs
C) incremental revenues exceed fixed costs
D) total revenues exceed total costs

When deciding to accept a one-time-only
special order from a wholesaler, management should do all of the following
EXCEPT:

A) analyze product costs
B) consider the special order’s impact on future prices of their products
C) determine whether excess capacity is available
D) verify past design costs for the product

When there is excess capacity, it makes
sense to accept a one-time-only special order for less than the current selling
price when:

A) incremental revenues exceed incremental costs
B) additional fixed costs must be incurred to accommodate the order
C) the company placing the order is in the same market segment as your current
customers
D) it never makes sense

Full cost of the product is:

A) the sum of fixed costs in all the business functions of the value chain
B) the sum of variable costs in all the business functions of the value chain
C) the sum of all variable and fixed costs in all the business functions of the
value chain
D) the sum of all costs in the value chain minus marketing costs

Other than price, what other items
should Grant’s Kitchens consider before accepting this one-time-only special
order?

A) reaction of shareholders
B) reaction of existing customers to the lower price offered to Ms. Wang
C) demand for cherry cabinets
D) price is the only consideration
Answer: B
???
If Ms. Wang wanted a long-term
commitment for supplying this product, this analysis:

A) would definitely be different
B) may be different
C) would not be different
D) does not contain enough information to determine if there would be a
difference

An example of a quantitative factor for
the decision-making process is:

A) customer satisfaction
B) employee morale
C) product quality
D) manufacturing overhead

If there was limited capacity, all of
the following amounts would change EXCEPT:

A) opportunity costs
B) differential costs
C) variable costs
D) the minimum acceptable price

The sum of all the costs incurred in a
particular business function (for example, marketing) is called the:

A) business function cost
B) full product cost
C) gross product cost
D) multiproduct cost

The sum of all costs incurred in all
business functions in the value chain (product design, manufacturing,
marketing, and customer service, for example) is known as the:

A) business cost
B) full product cost
C) gross product cost
D) multiproduct cost

An example of a qualitative factor for
the decision-making process is:

A) customer satisfaction
B) units sold
C) material cost
D) labor hours incurred

Outsourcing is:

A) purchasing goods and services internally
B) never a viable option
C) more desirable than insourcing
D) purchasing goods and services from outside vendors

Insourcing is:

A) purchasing goods and services internally
B) purchasing goods and services from outside vendors
C) more expensive than outsourcing
D) less expensive than outsourcing

Problems that should be avoided when
identifying relevant costs include all of the following EXCEPT:

A) assuming all variable costs are relevant
B) assuming all fixed costs are irrelevant
C) using unit costs that do not separate variable and fixed components
D) using total costs that separate variable and fixed components

The BEST way to avoid misidentification
of relevant costs is to focus on:

A) expected future costs that differ among the alternatives
B) historical costs
C) unit fixed costs
D) total unit costs

Factors used to decide whether to
outsource a part include:

A) the supplier’s cost of direct materials
B) if the supplier is reliable
C) the original cost of equipment currently used for production of that part
D) past design costs used to develop the current composition of the part

Relevant costs of a make-or-buy
decision include all of the following EXCEPT:

A) fixed salaries that will not be incurred if the part is outsourced
B) current direct material costs of the part
C) special machinery for the part that has no resale value
D) material-handling costs that can be eliminated

Which of following are risks of
outsourcing the production of a part?

A) unpredictable quality
B) unreliable delivery
C) unscheduled price increases
D) All of these answers are correct.

Which of the following minimize the
risks of outsourcing?

A) the use of short-term contracts that specify price
B) the responsibility for on-time delivery is now the responsibility of the
supplier
C) building close relationships with the supplier
D) All of these answers are correct.

The cost to produce Part A was $10 per
unit in 20X3 and in 20X4 it has increased to $11 per unit. In 20X4, Supplier
XYZ has offered to supply Part A for $9 per unit. For the make-or-buy decision:

A) incremental revenues are $2 per unit
B) incremental costs are $1 per unit
C) net relevant costs are $1 per unit
D) differential costs are $2 per unit

When evaluating a make-or-buy decision,
which of the following does NOT need to be considered?

A) alternative uses of the production capacity
B) the original cost of the production equipment
C) the quality of the supplier’s product
D) the reliability of the supplier’s delivery schedule

For make-or-buy decisions, a supplier’s
ability to deliver the item on a timely basis is considered a(n):

A) qualitative factor
B) relevant cost
C) differential factor
D) opportunity cost
Answer: A
???
The incremental costs of producing one
more unit of product include all of the following EXCEPT:

A) direct materials
B) direct labor
C) variable overhead costs
D) fixed overhead costs

Direct materials $40, direct labor $10,
variable overhead costs $30, and fixed overhead costs $20. In the short term,
the incremental cost of one unit is:

A) $30
B) $50
C) $80
D) $100

Unit cost data can MOST mislead
decisions by:

A) not computing fixed overhead costs
B) computing labor and materials costs only
C) computing administrative costs
D) not computing unit costs at the same output level

Schmidt Sewing Company incorporates the
services of Deb’s Sewing. Schmidt purchases pre-cut dresses from Deb’s. This is
primarily known as:

A) insourcing
B) outsourcing
C) relevant costing
D) sunk costing

Pearce Sign Company manufactures signs
from direct materials to the finished product. This is considered:

A) insourcing
B) outsourcing
C) relevant costing
D) sunk costing

Which of the following would NOT be
considered in a make-or-buy decision?

A) fixed costs that will no longer be incurred
B) variable costs of production
C) potential rental income from space occupied by the production area
D) unchanged supervisory costs