Name: __________________________ Date: _____________ 1.

A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to A) assign responsibility for the decision. B) provide relevant revenue and cost data about each course of action. C) determine the amount of money that should be spent on a project. D) decide which actions that management should consider.

2. Which of the following stages of the management decision-making process is improperly sequenced? A) Evaluate possible courses of action → Make decision. B) Assign responsibility for the decision → Identify the problem. C) Identify the problem → Determine possible courses of action. D) Assign responsibility for decision → Determine possible courses of action.

3. Internal reports that review the actual impact of decisions are prepared by A) department heads. B) the controller. C) management accountants. D) factory workers.

4. The process of evaluating financial data that change under alternative courses of action is called A) double entry analysis. B) contribution margin analysis. C) incremental analysis. D) cost-benefit analysis.

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If Hermantic. B) only revenues are analyzed. Inc. D) both costs and revenues that stay the same between alternate courses of action will be analyzed.000 6. can purchase the units externally for $80. A) only costs are analyzed. In incremental analysis.000 13. what is the correct make-or-buy decision? A) Make and save $1. can produce 100 units of a component part with the following costs: Direct Materials Direct Labor Variable Overhead Fixed Overhead $30.000 22. Inc.000 32.000 of the fixed costs can be avoided.000 and only $8.000 B) Buy and save $1. can purchase the component part externally for $88.000 .000 C) Make and save $5. Use the following to answer questions 6-7: Hermantic.000 D) A decrease of $22.000. by what amount will its total costs change? A) An increase of $80. Inc.000 B) An increase of $5. If Hermantic.000 D) Buy and save $13.000 7.000 C) An increase of $17. C) both costs and revenues may be analyzed.5.

8.00 per batch C) $31. How much will Hungry Bites save if it accepts the offer? A) $2. B) incremental cost. D) neither incremental revenue nor incremental cost.00 Variable overhead 11. Page 3 .00 An outside supplier has offered to produce the corn chips for $25 per batch.00 Direct labor 13. The cost of one batch is below: Direct materials $18.00 per batch D) $6. Hungry Bites produces corn chips.00 per batch 9.00 per batch B) $17. C) both incremental revenue and incremental cost. The focus of a sell or process further decision is A) incremental revenue.00 Fixed overhead 14.

D) reduces the cost of the old equipment. C) sunk cost. Book value of old equipment is considered to be a A) relevant cost. trade-in allowance available on old equipment A) increases the cost of the new equipment. B) is relevant because it will not be realized if the old equipment is retained. D) cost that can be changed by a present or future decision. B) semi-relevant cost. Which of the following is considered a relevant cost? A) The book value of the old equipment B) Depreciation expense on the old equipment C) The loss on the disposal of the old equipment D) The current disposal price of the old equipment 11. A company decided to replace an old machine with a new machine. .10. In a retain or replace equipment decision. C) is not relevant to the decision. A company is deciding on whether to replace some old equipment with new equipment. Which of the following is not a relevant cost for incremental analysis? A) Annual operating cost of the new equipment B) Annual operating cost of the old equipment C) Net cost of the new equipment D) Accumulated depreciation on the old equipment 13. 12.

000. If management decides to eliminate this product line. The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance.000) If this product line is eliminated. B) total net income will decrease by the amount of the product line's fixed costs. 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. one of which reflects the following results: Sales $215.000 Contribution margin 90. the company's net income will A) increase by $50.000. If the product line is discontinued.000 Variable expenses 125.000 Net loss $(50. A) total net income will increase by the amount of the product line's fixed costs.000. A company has three product lines. C) decrease by $6. B) decrease by $90. Page 5 .14.000 Fixed expenses 140. C) the contribution margin of the product line will indicate the net income increase or decrease. A company is considering eliminating a product line. D) the company's total fixed costs will decrease.000. D) increase by $6. 15.

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