Ch 8 review

Which of the following is a sunk​ cost?

Purchase price of vehicle to be traded in

In a special sales order​ decision, the special price must exceed the variable cost of filling the order. In other​ words, the special order must have

a positive contribution margin

Which of the following pairs are characteristics of price−​setters?

cost-plus pricing and less competition

Sunk costs should be considered when deciding whether to sell a product as is or process it further.

false

Managers should consider all of the following when deciding whether to accept a special​ order, except

fixed costs that will not be affected by the order

All of the following are outsourcing​ considerations, except

how do our fixed cost compare to the outsourcing cost

Fixed costs that do not differ between two alternatives are

irrelevant to the decision

Unavoidable fixed costs are

irrelevant to the decision of whether to discontinue a product line because they will not differ between alternatives.

Common fixed costs that are allocated between departments are generally

irrelevant to the decision of whether to discontinue the department.

Outsourcing decisions are sometimes referred to as

make-or-buy decisions

All of the following are considerations for discontinuing a product or product​ line, except

not having any free capacity

When the extra revenue from processing further is less than the extra cost of processing​ further, the best decision would be to

not process further

Which of the following best describes a​ "sunk cost"?

Costs that were incurred in the past and cannot be changed

A​ "relevant cost" is best described by which of the​ following?

Expected future costs that differ among alternatives

A​ "sales mix" is best described by which of the​ following?

The relative number of all products to be sold

"Total cost of product or​ service" is best described as which of the​ following?

all cost incurred along the value chain in connection with the product or service

Managers must consider which of the following when pricing a product or​ service

all costs

Fixed costs that are allocated among all departments are known as

common fixed costs

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

constraint

The format of the income statement most useful in decision−making is which of the​ following?

contribution margin format

Companies with production constraints and irrelevant fixed costs will be most profitable when they maximize production of the product with the highest

contribution margin per unit of the constraint

The contribution margin per unit of constraint is calculated as

contribution margin per unit times × units per constraint

Fixed costs that may be avoided in the future are referred to as

relevant costs

In deciding whether to​ outsource, managers must consider

relevant fixed and variable componets

In a special sales order​ decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be

relevant to the decision

Target total cost is described by which of the​ following?

revenue at market price - desired profit

A company should​ ________ when making a short−term special decision.

separate variable costs from fixed cost

Which of the following could be a constraint for selling a​ product?

shelf space, available labor hours and store hours

Which of the following pairs are characteristics of price−​takers?

target costing and new heavy competition

Bear Country Granola is considering selling premium granola. It already sells regular for​ $6.75/pound and would sell premium granola for​ $9.50/pound. The cost for organic grains for the premium granola would be​ $1.15/pound. A cost that would not be considered in this decision would be

the cost of refining the regular granola.

In a sell or process further​ decision, the company should process further if

the extra cost of processing further is less than the extra value

A manager should always reject a special order if

the special order price is less than the variable costs of the order.

Big−box retailers such as​ Lowe's are considered price−takers because

their products are not unique

Which of the following describes the products and services of companies that are price−​setters?

they tend to be unique

The cost−plus price is described by which of the​ following?

total cost + desired profit

Fixed costs that continue to exist even after a product line is discontinued are called

unavoidable fixed costs

All of the following are product mix considerations except

which product has the most sunk costs?