Reference no: EM132527610

Question 1: 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?

A. differential costs

B. sunk costs

C. avoidable costs

D. unavoidable costs

Question 2: Which of the following is not one of the five steps in the decision-making process?

A. review, analyze, and evaluate decision

B. identify alternatives

C. decide best action

D. consult with the CFO concerning variable costs

Question 3:  Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Curate Furniture approached Jansen about buying 1,200 shelves for bookshelves 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 Jensen accepts the special order?

A. profits will increase by $7,200

B. profits will increase by $31,200

C. profits will increase by $600

D. profits will decrease by $1,200

Question 4: Which of the following is a disadvantage of outsourcing?

A. freeing up capacity

B. transferring production and technology risks

C. limiting ability to upsize or downsize production

D. freeing up capital

Question 5: Which of the following is one of the two approaches used to analyze data in the decision to keep or discontinue a segment?

A. comparing contribution margins and variable costs

B. comparing gross margin and variable costs

C. comparing total contribution margin under each alternative

D. comparing contribution margins and fixed costs

Question 6: 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. a decrease of $5,000

B. a decrease of $30,000

C. a decrease of $5,000

D. an increase of $30,000

Question 7:  A company produces two products, E and F, in batches of 100 units. The production and cost data are:

                                        Product E                    Product F

Contribution margin per batch    $450                         $340

Machine set-ups needed per batch $25                        $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?

A. $204,000

B. $12,000

C. $216,000

D. $54,000