Question :
61.Gibbs Corporation makes indoor gas fireplaces. A standard fireplace includes : 1257164
61.Gibbs Corporation makes indoor gas fireplaces. A standard fireplace includes unit-level materials, labor, and overhead costs. In addition, the company incurs product-level engineering and advertising costs. The sales staff is paid a 5% commission on each fireplace sold. A sales representative has been in contact with a building developer who wants to buy 20 fireplaces only if he can buy them at amount lower than Gibbs’ selling price. Which of the following costs would be relevant to this special order decision?
A. The sales commissions
B. The product-level engineering and advertising costs
C. The unit-level materials, labor, and overhead
D. All of these.
62.Which of the following statements is incorrect?
A. When faced with multiple demands on a constrained resources, managers should choose the product that provides the highest unit contribution margin.
B. Constraints are limitations on a company’s ability to satisfy demands for its products.
C. Constraints are also referred to as bottlenecks.
D. Managers seek to minimize the impact of bottlenecks on the operations of a business.
63.Which of the following is a true statement regarding product-level costs?
A. Product-level costs are only relevant to a decision when adding a product to a company’s product line.
B. Product-level costs are generally relevant to outsourcing decisions.
C. Product-level costs are generally relevant to special order decisions.
D. Product-level costs are incurred to support the entire company.
64.All of the following are examples of product-level costs except:
A. product inspection costs.
B. product advertising costs.
C. engineering design costs.
D. patent costs.
65.Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year: Easton can currently purchase the scooters it makes from another company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. Which of the following costs would be classified as a unit-level cost?
A. Company president’s salary
B. Depreciation on manufacturing equipment
C. Materials cost
D. Real estate taxes on factory
66.Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year: Easton can currently purchase the scooters it makes from another company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. Which of the following costs would be classified as a facility-level cost?
A. Inspection costs
B. Shipping and handling
C. Materials cost
D. Company president’s salary
67.Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year: Easton can currently purchase the scooters it makes from Weston Company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. If Easton outsources the scooters to Weston, which of the following costs would be relevant to the outsourcing decision?
A. Materials cost
B. Shipping and handling
C. Inspection costs
D. All of these.
68.Which of the following statements is true?
A. Outsourcing decreases the extent of a company’s vertical integration.
B. Reputation of the supplier is a critical issue in an outsourcing decision.
C. An outsourcing decision involves a purchase offer from a customer at a lower-than-normal selling price.
D. Both outsourcing decreases the extent of a company’s vertical integration and reputation of the supplier is a critical issue in an outsourcing decision are true.
69.Asset replacement decisions involve:
A. choices between continuing using existing materials or replacing them with less expensive materials.
B. choices between closing down or continuing to operate a segment of a business.
C. choices between continuing operating existing equipment or replacing it with new equipment.
D. None of these.
70.Which costs are relevant for equipment replacement decisions?
A. Unit-level costs
B. Batch-level costs
C. Product-level costs
D. All of these.
71.Breezy Company is disposing of equipment that was originally purchased for $600,000 and has $240,000 of accumulated depreciation to date. The same equipment would cost $800,000 to replace. What is the total amount of sunk cost?
A. $240,000
B. $360,000
C. $840,000
D. $800,000
72.Max bought a ticket to the championship baseball game for $75. Someone approaches him outside the stadium and offers him $175 for his ticket. If Max decides to go to the game, instead of selling his ticket, how much does it cost Max to go to the game?
A. $75
B. $100
C. $175
D. None of these.
73.Pilot Motors Corporation is an automobile manufacturer. The company produces its own motors, tires, and other automobile parts. Pilot has the opportunity to purchase tires from another manufacturer instead of producing them in their own facility. This type of decision is typically known as a(n):
A. outsourcing decision.
B. special order decision.
C. segment elimination decision.
D. asset replacement decision.
