Question : 35) A large hotel chain currently expanding and has decided : 1211779

35) A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Black Forrest Incorporated is invited to submit a bid to the hotel chain. What is the lowest price per unit Black Forrest should bid on this long-term order?

A) $126

B) $144

C) $180

D) $270

36) Zephram Corporation has a plant capacity of 200,000 units per month. Unit costs at capacity are:

Direct materials$4.00

Direct labor6.00

Variable overhead3.00

Fixed overhead1.00

Marketing—fixed7.00

Marketing/distribution—variable3.60

Current monthly sales are 190,000 units at $30.00 each. Q, Inc., has contacted Zephram Corporation about purchasing 2,000 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is Zephram’s change in operating profits if the one-time-only special order is accepted?

A) $14,800 increase

B) $17,200 increase

C) $22,000 increase

D) $33,200 increase

37) The sum of all the costs incurred in a particular function, such as marketing, is called the ________.

A) business function cost

B) full product cost

C) opportunity cost

D) total manufacturing overhead

38) Business function costs are ________.

A) the sum of all fixed costs, sunk costs, and opportunity costs in a particular business function of the value chain

B) the sum of all variable and fixed costs in a particular business function of the value chain

C) the sum of all variable and fixed costs in all business functions of the value chain

D) the sum of all fixed costs, sunk costs, and opportunity costs in all business functions of the value chain

39) Which of the following costs is irrelevant in the decision making of a special order when there is idle production capacity?

A) fixed manufacturing costs

B) units sold

C) material cost

D) labor hours incurred

40) Which of the following is an appropriate step when identifying relevant costs to make a business

decision?

A) assuming all variable costs are relevant

B) assuming all fixed costs are irrelevant

C) separating total costs into business function costs and full costs

D) separating total costs into variable and fixed components

41) The best way to avoid misidentification of relevant costs is to focus on ________.

A) expected future costs that differ among the alternatives

B) historical costs

C) unit fixed costs

D) total unit costs

42) Factors used to decide whether to outsource a part include ________.

A) the supplier’s cost of direct materials

B) if the supplier is reliable

C) the original cost of equipment currently used for production of that part

D) past design costs used to develop the current composition of the part

43) Relevant costs are ________.

A) sunk costs

B) expected future costs

C) actual present costs

D) historical costs

44) Direct materials are $600, direct labor is $150, variable overhead costs are $450, and fixed overhead costs are $300. The cost of one unit is ________.

A) $450

B) $750

C) $1200

D) $1500