Acct 2101 Chapter 7
direct fixed costs
A _________ is one that can be attributed to a specific segment of the business.
differential costs
Costs that change across decision alternatives are
opportunity costs
The foregone benefit of choosing one alternative over another is measured by _____ ______
The selling price of the product
The manager of Hampton, Inc. is trying to decide whether to make or buy a component of the product it sells. Which of the following costs and benefits is not relevant to the decision? A. Direct labor cost involved in making the component B. The purchase price of the component if it is bought C. Variable manufacturing overhead involved in making the component D. The selling price of the product
To accept or reject the offer
What are the decision alternatives in a special-order decision? A. To make or buy the product. B. To continue or discontinue the product. C. To accept or reject the offer. D. To sell-or-process further.
the highest contribution margin per direct labor hour
When a firm has limited direct labor hours, it should prioritize the product with A. the highest selling price per unit. B. the highest contribution margin per unit. C. the highest contribution margin per direct labor hour. D. the lowest direct labor hours per unit.
Fixed overhead
Which of the following costs is not relevant in a special-order decision? A. Direct labor B. Direct materials C. Variable overhead D. Fixed overhead
common fixed costs
Which of the following is irrelevant to the decision to eliminate an unprofitable segment? A. The segment margin. B. Direct fixed costs. C. Common fixed costs. D. Segment revenue.
Identify the activity cost drivers
Which of the following is not a step in the managerial decision-making process? A. Identify the activity cost drivers. B. Review the results of the decision-making process. C. Determine the alternatives. D. Evaluate the costs and benefits of the alternatives
Calculate the payback period
Which of the following is not a step in the managerial decision-making process? A. Identify the decision problem B. Calculate the payback period C. Determine the decision alternatives D. Evaluate the costs and benefits of the alternatives
Choose the appropriate hurdle rate
Which of the following is not a step in the managerial decision-making process? A. Identify the decision problem B. Review the results of the decision-making process C. Choose the appropriate hurdle rate D. Evaluate the costs and benefits of the alternatives
Forecast the potential sales
Which of the following is not a step in the managerial decision-making process? A. Identify the decision problem B. Review the results of the decision-making process C. Determine the decision alternatives D. Forecast the potential sales
opportunity costs
Which of the following is not another term for relevant costs? A. differential costs B. incremental costs C. opportunity costs D. avoidable costs
The cost of processing the product "as is"
Which of the following is not relevant to a sell-or-process further decision? A. The cost of processing the product "as is" B. The cost of processing the product further C. The opportunity cost of spending resources processing the product further D. The incremental revenue from processing the product further
opportunity costs are now relevant
Which of the following is true of a firm that has reached the limit on its resources? A. It has idle capacity B. Opportunity costs are now relevant C. It has no relevant costs D. It has excess capacity
To be relevant, a cost must be an opportunity cost
Which of the following statements is false? A. Sunk costs are never relevant. B. Sunk costs are costs that occurred in the past. C. To be relevant, a cost must be an opportunity cost. D. To be relevant, a cost must occur in the future.
Special-order
Which of the following types of decisions involves deciding whether to accept or reject an order that is outside the scope of normal sales? A. Special-order B. Make-or-buy C. Continue or discontinue D. Sell-or-process further
continue-or-discontinue
Which of the following types of decisions involves deciding whether to eliminate a particular division or segment of the business? A. Special-order B. Make-or-buy C. Continue-or-discontinue D. Sell-or-process further
sell-or-process further
Which of the following types of decisions involves deciding whether to sell a product as is or continue to refine it so that it can be sold at a higher price? A. Special-order B. Make-or-buy C. Continue-or-discontinue D. Sell-or-process further
relevant cost
a cost that differs across decision alternatives is a ________
the bottleneck
what is the term for the most constrained resource?
