Chapter 11 - Decision Making and Relevant Information

4/13/2021 Chapter 11: Decision Making and Relevant Information
Chapter 11: Decision Making and

Relevant Information
Poin total 47/50
Pretest Session 6
Name *
Achmad Rizal Wicaksono
NIM *
1201912001
A decision model involves a(n) ________. * 1/1
informal method of making a choice at the lower level management using sensitivity
analysis
formal method of making a choice that often involves both quantitative and
qualitative analyses
informal method of making a choice which is discussed in detailed in the financial

reports
formal method of making a choice at the lower level management using advanced
management techniques such as balance scorecard
https://docs.google.com/forms/d/e/1FAIpQLSfw6GyQTTdGpwbB4F9kZsDRb570Jk8vgxtZO_76_eRxzTzQGQ/viewscore?viewscore=AE0zAgCf6eEn… 1/19
The formal process of choosing between alternatives is known as a(n) 1/1

________. *
relevant model
decision model
alternative model
prediction model
Place the following steps from the five-step decision process in order: A 1/1
= Obtain information including historical costs; B = Evaluate performance
to provide feedback; C = Make decisions choosing among alternatives; D
= Make predictions about the future; E = Identify the problem and
uncertainties *
A, E, D, B, C
E, A, D, B, C
E, A, D, C, B
D, C, B, A, E
Feedback regarding previous actions may affect ________. * 1/1
future predictions
implementation of the decision
the decision model
All of these answers are correct.
When using the five-step decision process, which one of the following 1/1
steps should be done last? *
obtain information
choose an alternative
evaluation and feedback
implementing the decision
When using the five-step decision process, which one of the following 1/1
steps should be done first? *
obtain information
choose an alternative
evaluation and feedback
implementing the decision
For decision making, a listing of the relevant costs ________. * 1/1
will help the decision maker concentrate on the pertinent data
will only include historical costs
will only include costs that that are same among alternatives
y g
will include both sunk costs and opportunity costs
In evaluating different alternatives, it is useful to concentrate on ···/1

________. *
variable costs
fixed costs
total costs
relevant costs
Tidak ada jawaban yang benar
Which of the following costs is relevant in a decision-making process? * 1/1
prepaid insurance costs
historical costs
sunk costs
variable costs
Which of the following costs always differ among future alternatives? * 1/1
fixed costs
historical costs
relevant costs
variable costs
Sunk costs are ________. * 1/1
costs incurred as a result of an investment position
costs that is the sum of all costs in a particular business function of the value chain
the contributions to operating income that is forgone by not using a limited resource
in its next-best alternative use
costs that are unavoidable and cannot be changed no matter what action is
taken
Sunk costs ________. * 1/1
are relevant
are differential
have future implications
are ignored when evaluating alternatives
Which of the following is an example of sunk costs? * 1/1
wages to security staffs
cost of purchasing raw materials
cost of an alternative investment

cost of an alternative investment
wages payable to skilled laborers to make a product
A relevant revenue is revenue that is a(n) ________. * 1/1
past revenue
future revenue
in-hand revenue
earned revenue
Which of the following is true of relevant information? * 1/1
All fixed costs are relevant.
Future revenues and expenses are relevant.
Past costs are not relevant.
All fixed costs are not relevant.
When making decisions ________. * 1/1
more weightage should be given to qualitative factors
more weightage should be given to quantitative factors
appropriate weight must be given to both quantitative and qualitative factors
both quantitative and qualitative factors are unimportant

q q p
Which of the following is true of historical costs? * 1/1
They are useful for making future predictions.
They are used for decision making.
They are always accounted as opportunity costs.
They cannot be fixed costs.
Roberto owns a small body shop. His major costs include labor, parts, 1/1
and rent. In the decision-making process, these costs are considered to
be ________. *
empirical costs
qualitative factors
quantitative factors
opportunity costs
Employee morale at Dos Santos, Inc., is very high. This type of 1/1
information is an example of ________. *
qualitative factors
quantitative factors
irrelevant factors
financial factors
One-time-only special orders should only be accepted if ________. * 1/1
incremental revenues exceed incremental costs
differential revenues exceed variable costs
incremental revenues exceed fixed costs
total revenues exceed total costs
When deciding to accept a one-time-only special order from a 1/1

wholesaler, management should *
consider the sunk costs and opportunity costs
not consider the special order's impact on future prices of their products
determine whether excess capacity is available
verify past design costs for the product
When there is an excess capacity, it makes sense to accept a one-time- 1/1

only special order for less than the current selling price if ________. *
incremental revenues exceed incremental costs
additional fixed costs is incurred to accommodate the order
the company placing the order is in the same market segment as your current
customers
incremental revenue equals incremental operating income
Which of the following costs is NOT considered to calculate the minimum1/1

acceptable price of a one-time-only special order? *
marketing costs
direct material costs
indirect material costs
special design costs
An example of a qualitative factor for the decision-making process is 1/1

________ *
customer satisfaction
employee wages
audit report
manufacturing overhead
The sum of all the costs incurred in a particular function, such as 1/1
marketing, is called the ________. *
business function cost
full product cost

opportunity cost
total manufacturing overhead
Business function costs are ________. * 1/1
the sum of all fixed costs, sunk costs, and opportunity costs in a particular business
function of the value chain
the sum of all variable and fixed costs in a particular business function of the
value chain
the sum of all variable and fixed costs in all business functions of the value chain
the sum of all fixed costs, sunk costs, and opportunity costs in all business
functions of the value chain
The best way to avoid misidentification of relevant costs is to focus on 1/1

________. *
expected future costs that differ among the alternatives
historical costs
unit fixed costs
total unit costs
Unit cost data can most mislead decisions by ________. * 1/1
not computing fixed overhead costs
computing labor and materials costs only

https://docs.google.com/forms/d/e/1FAIpQLSfw6GyQTTdGpwbB4F9kZsDRb570Jk8vgxtZO_76_eRxzTzQGQ/viewscore?viewscore=AE0zAgCf6eE… 10/19
computing labor and materials costs only
computing administrative costs
not computing unit costs at the same output level
Relevant costs in a make-or-buy decision of a part include ________. * 1/1
setup overhead for the manufacture of the product using the outsourced part
currently used manufacturing capacity that has alternative uses
annual plant insurance costs that will remain the same
management consultant fees to restructure the organization framework of the

company
Which of the following is an example of outsourcing? * 1/1
a smartphone manufacturing company factoring its receivables as a source of

capital
a large conglomerate company selling a business wing to its competitor
an automobile company merging with a manufacturing firm to create economic

synergies
a petrochemical company assigning a vendor to make software for its supply

chain management
When evaluating a make-or-buy decision, which of the following needs 1/1

to be considered? *
alternative uses of the production capacity
the original cost of the production equipment

the original cost of the production equipment
pension costs to the current employees
material-handling costs that cannot be eliminated
Opportunity costs is defined as ________. * 1/1
the cost of manufacturing a one-time-only special order when a firm has excess
capacity to make more products
the contribution to operating income that is forgone by not using a limited

resource in its next-best alternative use
the sum of variable and fixed costs in a particular business function of the value
chain, such as manufacturing costs or marketing costs
the sum of variable and fixed costs in all business functions of the value chain, such
as manufacturing costs or marketing costs
The opportunity cost of holding significant inventory includes ________. * 1/1
the interest forgone on an alternative investment
additional insurance costs
additional storage costs
the rent of the warehouse
Determining which products should be produced when the plant is 1/1

operating at full capacity is referred to as a(n) ________. *
outsourcing analysis
total alternative approach

total alternative approach
product-mix decision
short-run focus decision
Product mix decisions ________. * 1/1
have a long-run focus
help determine how to maximize operating profits
focus on selling price per unit
help maximizing opportunity costs
Capacity constraints include ________. * 1/1
increased demand of warranty services for a pharmaceutical product
increased need of display space for a retailer
decreased demand for a pharmaceutical product
increased fuel efficiency of cars
Which of the following methods is used to determine the most profitable 1/1
production schedule and the most profitable product mix? *
balanced scorecard
cause and effect diagram
transfer pricing
linear programming
In product-mix decisions, managers should ________. * 1/1
always focus on maximizing total contribution margin
only focus on the product with the greatest contribution margin per machine-hour
only focus on the full costs of the product
always focus on maximizing the selling price of the product
The theory of constraints (TOC) defines throughput margin as ________. * 1/1
operating income minus the direct material costs of the goods sold
operating income minus the direct labor costs of the goods sold
revenues minus the direct material costs of the goods sold
revenues minus the full costs of the goods sold
Based on the theory of constraints, investments equal ________. * 1/1
the sum of material costs in direct and indirect materials, work-in-process, and
finished goods inventories; R&D costs; and business function costs
the sum of material costs in direct materials, work-in-process, and finished

goods inventories; R&D costs; and capital costs of equipment and buildings
the sum of material costs in direct and indirect materials, work-in-process, and
fi i h d d i t i R&D t d f ll t
finished goods inventories; R&D costs; and full costs
the sum of material costs in direct materials, work-in-process, and finished goods
inventories; R&D costs; sunk costs, full costs, and business function costs
When deciding whether to discontinue a segment of a business, relevant 1/1

costs include ________. *
auditing expenses for the whole company
fees paid to a management consultant to study the feasibility of the business

segment
annual insurance costs of the company
future administrative costs that can be eliminated
Zephyr Energies, Inc. is considering eliminating one of its product lines. 0/1
The fixed costs currently allocated to the product line will be allocated to
other product lines upon discontinuance. What financial effects occur if
the product line is discontinued? *
net income will decrease by the amount of the contribution margin of the product
line being discontinued
the company's total fixed costs will increase by the amount of the contribution
margin of the product line being discontinued
the company's total fixed costs will decrease by the amount of the product line's
fixed costs
net income will decrease by the amount of the product line's fixed costs
Jawaban yang benar
net income will decrease by the amount of the contribution margin of the product line
being discontinued
Discontinuing unprofitable products will ________. * 0/1
increase profitability if the resources no longer required by the discontinued product

can be eliminated
increase profitability if capacity constraints are adjusted
decrease profitability if the fixed costs does not change after discontinuing the
particular business segment
increase profitability when a large portion of the fixed costs are unavoidable
Jawaban yang benar
increase profitability if the resources no longer required by the discontinued product

can be eliminated
Managers tend to favor the alternative that makes their performance 1/1
look best. Therefore, they tend to focus on ________. *
how to implement the chosen alternative
the measures used in the decision model
the measures used in the performance evaluation model
gathering the required information
Book value is defined as the ________. * 1/1
sum of the original cost of an asset and the accumulated depreciation
difference between the market value of an asset and the accumulated depreciation
difference between the original cost of an asset and the accumulated

depreciation
sum of the market value of an asset and the accumulated depreciation
If management takes a multiple-year view in the decision model and 1/1

judges success according to the current year's results, a problem will
occur in the ________. *
decision model
performance evaluation model
production evaluation model
quantitative model
________ is relevant in a decision to replace equipment. * 1/1
Warehouse rent costs
Book value of old equipment
Accumulated depreciation on old equipment
Salvage value
Which of the following is true in a decision to keep or replace existing 1/1

equipment? *
The book value of the old equipment is relevant.
The disposal value of the old equipment is relevant.
Property taxes is relevant.
Depreciation on the new equipment is relevant.
A company decided to replace an old machine with a new machine. 1/1

Which of the following is considered a relevant cost? *
the book value of the old equipment
the depreciation expense on the old equipment
the loss on the disposal of the old equipment
the setup cost of the new equipment
What role does a trade-in allowance on old equipment play in a decision 1/1
to retain or replace equipment? *
It is relevant since it increases the cost of the new equipment.
It is irrelevant since it reduces the cost of the old equipment.
It is irrelevant to the decision since it does not impact the cost of the new
equipment.
It is relevant since it reduces the cost of the new equipment.
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4/13/2021 Chapter 11: Decision Making and Relevant Information

Chapter 11: Decision Making and

Achmad Rizal Wicaksono

A decision model involves a(n) ________. * 1/1

informal method of making a choice which is discussed in detailed in the financial

The formal process of choosing between alternatives is known as a(n) 1/1

Feedback regarding previous actions may affect ________. * 1/1

implementation of the decision

the decision model

All of these answers are correct.

evaluation and feedback

implementing the decision

evaluation and feedback

implementing the decision

For decision making, a listing of the relevant costs ________. * 1/1

will help the decision maker concentrate on the pertinent data

will only include historical costs

will include both sunk costs and opportunity costs

In evaluating different alternatives, it is useful to concentrate on ···/1

Tidak ada jawaban yang benar

Which of the following costs is relevant in a decision-making process? * 1/1

prepaid insurance costs

Sunk costs are ________. * 1/1

costs incurred as a result of an investment position

Sunk costs ________. * 1/1

have future implications

are ignored when evaluating alternatives

Which of the following is an example of sunk costs? * 1/1

wages to security staffs

cost of purchasing raw materials

cost of an alternative investment

wages payable to skilled laborers to make a product

A relevant revenue is revenue that is a(n) ________. * 1/1

Which of the following is true of relevant information? * 1/1

All fixed costs are relevant.

Future revenues and expenses are relevant.

Past costs are not relevant.

All fixed costs are not relevant.

When making decisions ________. * 1/1

more weightage should be given to qualitative factors

more weightage should be given to quantitative factors

appropriate weight must be given to both quantitative and qualitative factors

both quantitative and qualitative factors are unimportant

Which of the following is true of historical costs? * 1/1

They are useful for making future predictions.

They are used for decision making.

They are always accounted as opportunity costs.

They cannot be fixed costs.

One-time-only special orders should only be accepted if ________. * 1/1

incremental revenues exceed incremental costs

differential revenues exceed variable costs

incremental revenues exceed fixed costs

total revenues exceed total costs

When deciding to accept a one-time-only special order from a 1/1

consider the sunk costs and opportunity costs

determine whether excess capacity is available

verify past design costs for the product

When there is an excess capacity, it makes sense to accept a one-time- 1/1

incremental revenues exceed incremental costs

additional fixed costs is incurred to accommodate the order

incremental revenue equals incremental operating income

Which of the following costs is NOT considered to calculate the minimum1/1

direct material costs