Managerial Acct CHPT 9 & 10

A company produces two products, E and F, in batches of 100 units. The production and cost data are: PRODUCT E $450 , 25 / PRODUCT F $340 20. The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year?

$12,000

The Sarbanes-Oxley Act is sometimes referred to as the "Anti Chain Store Act"

F

Costs that a company or manager can influence are called discretionary costs.

FALSE

Youngstown Construction plans to discontinue its roofing segment. Last year, this segment generated a contribution margin of $65,000 and incurred $70,000 in fixed costs. Discontinuing the segment will allow the company to avoid half of the fixed costs. What effect is expected to occur to the company's overall profit?

a decrease of $30,000

9. Which of the following does not describe a management control system?

a system that only measures profitability

In a centralized organization, where are goals established?

at the highest level of the organization and promoted downward

Which of the following is one of the two approaches used to analyze data in the decision to keep or discontinue a segment?

comparing contribution margins and fixed costs

Which of the following is not a type of responsibility center?

concentrated cost center

Which of the following is not one of the five steps in decision-making process?

consult with CFO concerning variable costs

Segments are uniquely identifiable components of the business and can be categorized by all of the following except ________.

number of employees

A responsibility center in which managers are held accountable for both revenues and expenses is called a ________.

profit center

A key advantage of a decentralized organization is ________.

quicker decisions and response time

An important goal of a responsibility accounting framework is to help ensure which of the following?

segment and company financial goals are congruent.

10. Which type of incurred costs are not relevant in decision-making (i.e., they have no bearing on future events) and should be excluded in decision-making?

sunk cost

Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shelf. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320,000. However, the $1.50 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order?

Profits will increase by $600.

Outsourcing is the act of using another company to provide goods or services that your company requires.

T

Relevant costs are not a qualitative decision that should be considered in an outsourcing decision.

T

A system that establishes financial accountability for operating segments within an organization is called responsibility accounting.

TRUE

Organizational charts show the structure of an organization.

TRUE

A transfer pricing arrangement that uses the price that would be charged to an external customer is a ________.

market-based approach

An example of an uncontrollable cost would include all of the following except ________.

hourly rate of pay for the company's purchasing manager

Which of the following is a disadvantage of outsourcing?

limiting ability to upsize or downsize production