Decision Making MCQs

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What is the opportunity cost of making a component part in a factory given no alternative use of the capacity?






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The opportunity cost of making a component part in a factory with no excess capacity is the






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Power Systems, Inc., manufactures jet engines for the United States armed forces on a cost-plus basis. The cost of a particular jet engine the company...






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Hermo Company has just completed a hydro-electric plant at a cost of $21,000,000 The plant will provide the company’s power needs for the next 20 ye...






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Hermo Company has just completed a hydro-electric plant at a cost of $21,000,000 The plant will provide the company’s power needs for the next 20 ye...






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JJ Motors, Inc., employs 45 sales personnel to market its line of luxury automobiles. The average car sells for $23,000, and a 6% commission is paid t...






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A company wants to open a new store in one of two nearby shopping malls. In Mall A, the rent will be $250,000 per year. In Mall B, the rent will be 4%...






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A company wants to open a new store in one of three nearby shopping malls. In Mall A, the rent will be $300,000 per year. In Mall B, the rent will be ...






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A company wants to open a new store in one of three nearby shopping malls. In Mall A, the rent will be $300,000 per year. In Mall B, the rent will be ...






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A company wants to open a new store in one of three nearby shopping malls. In Mall A, the rent will be $300,000 per year. In Mall B, the rent will be ...






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Sunshine Corporation is considering the purchase of a new machine for $800,000. The machine is capable of producing 1.6 million units of product over ...






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Jack Blaze wants to rent store space in a new shopping mall for the 3-month holiday shopping season. Blaze believes he has a new product available tha...






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Sudden economic changes have forced Auto Facsimilie Co. to alter its business strategy. The company is considering eliminating product lines, laying o...






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Joe Cooper owns and operates an ice cream truck that he drives through residential neighborhoods to sell five different treats to the areas children ...






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Teen Co. recently reviewed the profitability of each of its segments The company’s Western Unit projected a loss for the coming period and was shut ...






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Kator Co. is a manufacturer of industrial components. One of their products that is used as a subcomponent in auto manufacturing is KB-96. This produc...






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The Sommers Company manufactures a variety of industrial valves. Currently, the company is operating at about 70% capacity and is earning a satisfacto...






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The Sommers Company manufactures a variety of industrial valves. Currently, the company is operating at about 70% capacity and is earning a satisfacto...






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The Sommers Company manufactures a variety of industrial valves. Currently, the company is operating at about 70% capacity and is earning a satisfacto...






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Panyer Co. is a producer of a tank component. This product, J-5, has the following selling price and costs per unit: .tg {border-collapse:collapse...






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Panyer Co. is a producer of a tank component. This product, J-5, has the following selling price and costs per unit: .tg {border-collapse:collapse...






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Pontotoc Industries manufactures a product that is used as a subcomponent by other manufacturers. It has the following price and cost structure: .t...






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Pontotoc Industries manufactures a product that is used as a subcomponent by other manufacturers. It has the following price and cost structure: .t...






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Production of a special order will increase gross profit when the additional revenue from the special order is greater than






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When considering a special order that will enable a company to make use of currently idle capacity, which of the following costs is irrelevant?






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Which of the following cost allocation methods is used to determine the lowest price that can be quoted for a special order that will use idle capaci...






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When only differential manufacturing costs are taken into account for special-order pricing, an essential assumption is that






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Clay Co has considerable excess manufacturing capacity A special job orders cost sheet includes the following applied manufacturing overhead costs: ...






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A mail-order confectioner sells fine candy in one-pound boxes. It has the capacity to produce 600,000 boxes annually, but forecasts that it will produ...






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A mail-order confectioner sells fine candy in one-pound boxes. It has the capacity to produce 600,000 boxes annually, but forecasts that it will produ...






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The loss of a key customer has temporarily caused Bedford Machining to have some excess manufacturing capacity. Bedford is considering the acceptance ...






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Raymund currently sells its only product to a single customer. Raymund has received a one-time-only order for 2,000 units from another buyer. Sale of ...






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In a make-versus-buy decision, the relevant costs include variable manufacturing costs as well as






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A companys approach to an insourcing vs outsourcing decision






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Costs relevant to an insourcing vs. outsourcing decision include variable manufacturing costs as well as






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In an insourcing vs. outsourcing situation, which of the following qualitative factors is usually considered?






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In an insourcing vs. outsourcing decision, the decision process favors the use of total costs rather than unit costs. The reason is that






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Which of the following qualitative factors favors the buy choice in an insourcing vs. outsourcing decision?






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Regis Company manufactures plugs used in its manufacturing cycle at a cost of $36 per unit that includes $8 of fixed overhead. Regis needs 30,000 of t...






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Regis Company manufactures plugs used in its manufacturing cycle at a cost of $36 per unit that includes $8 of fixed overhead. Regis needs 30,000 of t...






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Richardson Motors uses 10 units of Part No. T305 each month in the production of large diesel engines. The cost to manufacture one unit of T305 is pre...






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Richardson Motors uses 10 units of Part No. T305 each month in the production of large diesel engines. The cost to manufacture one unit of T305 is pre...






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Richardson Motors uses 10 units of Part No. T305 each month in the production of large diesel engines. The cost to manufacture one unit of T305 is pre...






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Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each month for use in production. The facilities now be...






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GiantCo has received an offer from PatriotCo to produce units that GiantCo currently produces and sells The unit price quoted by PatriotCo is higher t...






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When a multiproduct plant operates at full capacity, quite often decisions must be made as to which products to emphasize. These decisions are frequen...






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Whitehall Corporation produces chemicals used in the cleaning industry. During the previous month, Whitehall incurred $300,000 of joint costs in produ...






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Whitehall Corporation produces chemicals used in the cleaning industry. During the previous month, Whitehall incurred $300,000 of joint costs in produ...






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In joint-product costing and analysis, which one of the following costs is relevant when deciding the point at which a product should be sold to maxim...






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Copeland, Inc., produces X-547 in a joint manufacturing process. The company is studying whether to sell X-547 at the split-off point or upgrade the p...






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A firm produces two joint products (A and B) from one unit of raw material, which costs $1,000. Product A can be sold for $700 and product B can be so...






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A company has 7,000 obsolete toys carried in inventory at a manufacturing cost of $6 per unit. If the toys are reworked for $2 per unit, they could be...






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Grapevine Corporation produces two joint products, JP-1 and JP-2, and a single by-product, BP-1, in Department 2 of its manufacturing plant. JP-1 is s...






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Buchanan Corporation manufactures two products in a joint process incurring $150,000 of joint costs per batch that are allocated using the physical-me...






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Conway Corporation manufactures two products that are considered joint products. Common costs of $350,000, allocated using the physical measures metho...






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If the coefficient of elasticity is zero, then the consumer demand for the product is said to be






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Last week, the quantity of apples demanded fell by 6%. If this was a result of a 10% price increase, what is the price elasticity of demand for apples...






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The amount of boysenberries demanded for the third quarter rose from 1,250 units to 1,750 units from last year. This was due to a decrease in price fr...






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Suppose the price of mood rings rises from $3 to $4 when the quantity demanded of mood rings decreases from 1,000 to 900. What would be the price elas...






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In the pharmaceutical industry where a diabetic must have insulin no matter what the cost and where there is no substitute the diabetics demand curve...






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If a product has a price elasticity of demand of 2.0, the demand is said to be






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When a 5% fall in the price of velcro shoes causes the quantity demanded to increase by 10%, the demand for velcro shoes is said to be






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If oil producers and retailers were to increase the price of gasoline for cars during the summer season by $.05 per gallon, these suppliers anticipate...






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If the price of apples declines and total revenue received by the firm increases, the






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If a products demand is elastic and there is a decrease in price the effect will be






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Suppose that a stairway manufacturers price elasticity of demand was inelastic. If this manufacturer decided to increase the price of its stairways, ...






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If demand for a product is elastic, which one of the following would be true?






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The price elasticity of demand is most appropriately defined as the






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Which one of the following statements is the best definition of inelastic demand?






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Buyer-based pricing involves






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Which of the following price adjustment strategies is designed to stabilize production for the selling firm?






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Market-skimming pricing strategies could be appropriate when






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Which of the following pricing policies involves the selling company setting freight charges to customers at the actual average freight cost?






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In which product-mix pricing strategy is it appropriate for the seller to accept any price that exceeds the storage and delivery costs for the product...






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Several surveys point out that most managers use full product costs, including unit fixed costs and unit variable costs, in developing cost-based pric...






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If a U.S. manufacturers price in the U S market is below an appropriate measure of costs and the seller has a reasonable prospect of recovering the r...






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Which one of the following will not occur in an organization that gives managers throughout the organization maximum freedom to make decisions?






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The most fundamental responsibility center affected by the use of market-based transfer prices is a(n)






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Transfer pricing should encourage goal congruence and managerial effort. In a decentralized organization, it should also encourage autonomous decision...






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A proposed transfer price may be based upon the outlay cost. Outlay cost plus opportunity cost is the






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A proposed transfer price may be a cost-plus price. Variable-cost-plus price is the price






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A proposed transfer price may be based upon the full-cost price. Full-cost price is the price






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A limitation of transfer prices based on actual cost is that they






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Brent Co. has intracompany service transfers from Division Core, a cost center, to Division Pro, a profit center. Under stable economic conditions, wh...






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Pazer Inc produces portable televisions Pazers product manager proposes to increase the cost structure by adding voice-activated volume/channel contr...






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Systematic evaluation of the trade-offs between product functionality and product cost while still satisfying customer needs is the definition of






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Vince, Inc., has developed and patented a new laser disc reading device that will be marketed internationally. Which of the following factors should V...






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The advantages of incorporating full product costs in pricing decisions include all the following except






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Which one of the following situations best lends itself to a cost-based pricing approach?






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Companies that manufacture made-to-order industrial equipment typically use which one of the following?






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Which one of the following statements best describes characteristics of the growth phase of the product life cycle?






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Which one of the following is not a characteristic of market-based costing?






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Edward Sporting Ltd. is introducing a new product. Management considers the sales life cycle to strategically determine pricing on this innovative pro...






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Harding, Inc., prices its main product by adding 30% to the manufacturing cost per unit. Harding’s variable manufacturing costs are $12 per unit, v...






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A corporation produces and sells floor tiles. The corporation has five retail stores, each located in a different city. Each store has a different pri...






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Which one of the following pricing methods takes into consideration a product’s entire life cycle?






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Which one of the following statements best represents the order of the steps in developing target prices?






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A firm in which of the following industries is most likely to use a market-based as opposed to a cost-based approach to pricing decisions?






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A pharmaceutical company is preparing to release a new medication. The controller would like to consider the product life cycle in pricing, costing, a...






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Target cost per unit is the difference between target