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F U Mangerial

QuestionAnswer
Which of the following is an important assumption that is made when considering the decision to accept an order at a special price? The company is operating at less than capacity.
Which of the following describes one aspect of incremental analysis? only differential cost and differential revenues will be analyzed
When deciding to accept a special order from a new customer, which one of the following is not necessary by management? Reallocate overhead costs to additional products
Which of the following is most often a differential cost? Variable Overhead
Which one of the following costs should not be taken into consideration when making a decision? Unavoidable Costs
A company is within plant capacity. It is contemplating whether a special order should be accepted. The order will not impact regular sales. If the company accepts a special order, what will occur? Net income will increase if the special sales price per unit exceeds the unit variable costs.
When deciding to accept a one-time-only special order from a wholesaler, management should do all EXCEPT 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 incremental revenues exceed incremental costs.
which one should be ignored in a decision to produce additional units of product for a factory that is operating at less than 100% capacity, and the additional business will not use up the remainder of the plant capacity? Fixed administrative expenses
A company was evaluating the differences between two copiers. Which one of the following would be a qualitative aspect of making the decision? the color of one of the printers matches the color of the computer it will be attached to.
Which one of the following is an important assumption that is made when considering the decision to accept an order at a special price? The company is not currently operating at full capacity
Which costs are always incremental and relevant in decision analysis? Avoidable costs and opportunity costs
Relevant costs in accepting an order at a special price include all of the following except Fixed manufacturing overhead
An example of a qualitative performance measure is warmth of the hospital staff.
Why are sunk costs not considered relevant when choosing among alternatives? they remain the same among alternatives and do not add useful information for selecting an alternative
Under what conditions might a manufacturing firm sell a product for less than its regular price? If a firm has excess capacity that is sitting idle, and it can recover its incremental costs.
Which of the following is an example of a sunk cost? Equipment depreciation for last year
Which components are evaluated when using the Balanced Scorecard approach? Learning and growth, financial, customer, and internal business processes
Why are accounting distortions removed when evaluating performance using EVA? To encourage managers to spend money on elements that will benefit the company in the long-term
Why is an adjustment made to profit when calculating NOPAT? Divisional managers have no ability to control certain costs.
Why is an adjustment made to assets when determining residual income? The assets to which these relate have no financing cost related associated with them
Which one of the following is not a disadvantage of outsourcing? Profitable product lines may be dropped.
Which one of the following is not an advantage of decentralization for an organization? Better decisions, because the upper level managers have the most experience in making decisions
What causes the cost allocation death spiral? Allocated fixed costs are not avoidable.
Which one of the following is a reason that a company may adopt a balanced scorecard? To broaden the scope of performance evaluation to include qualitative measures
STS, Inc. expects a required rate or return of 14%. Its West Division has a ROI of 12.5%. Which statement is true concerning the performance of STS�s West Division ? West Division earned a profit of 12.5 cents on every dollar of assets invested
Which one of the following is most likely an investment center? The hybrid division of Toyota
What occurs when an accounting distortion adjustment is made when EVA is being determined? Costs that have no identifiable future benefits are capitalized
T or F: Negative media coverage is a qualitative factor in decision-making True
T or F: For outsourcing/insourcing decisions, incremental revenues and opportunity costs are always relevant False. There are never any incremental revenues with outsourcing
T or F: The primary reason companies evaluate decentralized divisions is to measure profitability False. Decentralized divisions are investment centers and their managers have control of assets as well as revenues and expenses. As such, managers should be evaluated on what they are able to control
T or F: EVA is used to evaluate performance of investment centers. True
T or F: Sunk costs are differential False. Sunk costs are never differential because they stay the same in amount regardless of which decision is made
T or F: Decreasing expenses can increase ROI. True. Profit will increase when expenses decline
T or F: Qualitative aspects of decisions are only considered if the quantitative analysis produces results that are inconclusive. False. They should always be considered.
T or F: A profit center manager is responsible for sales and costs True
T or F: Avoidable costs are always relevant True
T or F: Underinvesting often occurs when a segment manager is evaluated using ROI True. Managers are often hesitant to invest if a project will generate less than the current ROI, even if the IRRR of the investment generates are return higher than the required rate of return.
 

 



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