Question :
31)
Which of the following terms represents additional costs required to : 1196066
31)
Which of the following terms represents additional costs required to obtain an additional quantity, over and above existing or planned quantities of a cost object? 31)
______ A)
contract pocket costs B)
contract expense C)
super variable costs D)
contract increase costs E)
outlay costs
32)
A one-time-only special order decision 32)
______ A)
allows a company to sell products at prices which only cover fixed costs. B)
should consider only long-term costs and benefits. C)
must still consider short-term and long-term costs and benefits. D)
should consider only short-term costs and benefits. E)
should only be undertaken if there is idle capacity.
33)
Comics Plus has a current production level of 200,000 comics per month. Unit costs at this level are:
Direct materials$0.125
Direct labour0.200
Variable overhead0.075
Fixed overhead0.100
Marketing – Fixed0.100
Marketing/distribution – Variable0.200
Current monthly sales are 180,000 units. Printers, LTD has contacted Comics Plus about purchasing 15,000 units at $1.00 each. Current sales would not be affected by the special order, and variable marketing/ distributing costs would not be incurred on the special order.
What is Comics Plus’ change in profits using the contribution margin format if the order is accepted? 33)
______ A)
$2,000 decrease B)
$9,000 decrease C)
$2,000 increase D)
$11,000 increase E)
$9,000 increase
34)
Boyd Tool Company is a tool manufacturer. Production capacity is 3,000 units per month; however, they are considering alternative ways to increase capacity to 3,500 units. One of the alternatives involves purchasing new equipment.
In this alternative, there are two choices; machine A will provide increased capacity of 4,000 units per month, with unit costs of $14 at capacity, and machine B will increase capacity to 3,600 units per month with unit costs of $15 at capacity.
Both machines are adequate since Boyd’s does not intend to go beyond the 3,500 units per month level for the foreseeable future.
Relevant information for this decision includes? 34)
______ A)
whether other costs will change solely due to a capacity increase B)
the different unit cost of production between the two machine at their capacity levels C)
Boyd’s planned capacity utilization D)
excess capacity of either machine E)
the different unit cost of production between the two machines at Boyd’s planned capacity levels
35)
First Image has a plant capacity of 80,000 units per month. Unit costs at capacity are:
Direct materials$2.00
Direct labour3.00
Variable overhead1.50
Fixed overhead1.50
Marketing – Fixed3.50
Marketing/distribution – Variable1.80
Current monthly sales are 78,000 units at $12.60 each. Computer Output Management has contacted First Image about purchasing 2,000 units at $12.00 each. Current sales would not be affected by the special order. What is First Image’s change in profits if the order is accepted? 35)
______ A)
$8,600 B)
$11,000 C)
$19,600 D)
$7,400 E)
$16,600
36)
Unit cost data can mislead decisions by including irrelevant costs or by, 36)
______ A)
not computing unit costs at the relevant output level. B)
not computing fixed overhead costs. C)
including qualitative data. D)
computing administrative costs. E)
computing labour and materials costs only.
37)
Koch Brothers purchased a new production machine for $200,000. It is capable of producing 400,000 units over its useful life, thus the manufacturuer’s salesperson claimed the unit cost would only be $0.50. Koch’s own engineers recommended that the company acquire a machine that would have a unit cost of production of no more than $0.48 (with a $0.03 variance).
A competitor of the vendor, who also was trying to sell Koch some equipment, claimed that the $0.50 is understated by $0.04 per unit. The total anticipated demand over the asset’s useful life is 300,000 units.
Relevant information includes? 37)
______ A)
the $0.50 unit cost B)
the fact that the $0.50 falls below the $0.48 + $0.03 variance C)
the unit cost at Koch’s planned capacity utilization D)
being able to produce at excess capacity E)
the different unit costs of production between the two vendors’ machines
38)
The sum of all the costs incurred in a particular business function (for example, marketing) is called 38)
______ A)
multiproduct cost. B)
gross product cost. C)
full product cost. D)
incremental cost. E)
business function cost.
39)
The sum of all costs incurred in all business functions in the value chain (marketing, customer service, product design, and manufacturing, for example) is known as 39)
______ A)
business cost. B)
multiproduct cost. C)
gross product cost. D)
full product cost. E)
incremental cost.
40)
Which of the following should be focused on by management in order to avoid the pitfalls of relevant-cost analysis? 40)
______ A)
consider all anticipated future revenues B)
Anticipated revenues and costs and items that differ according to alternatives should be considered. C)
assume all variable costs are relevant D)
assume all fixed costs are irrelevant E)
include any item of revenue or cost that is either an expected future revenue or expected future cost, or, differs between the alternatives
