Question :
51.Omega Company reported the following information for the company’s two : 1257163
51.Omega Company reported the following information for the company’s two products: Assume that 75,000 machine hours are available; product X takes 4 machine hours to produce, and product Y takes 2 machine hours to produce. The company can sell all it can make of either product. Which of the following statements is true?
A. Product Y should be produced because more of it can be produced.
B. Product Y should be produced because it will produce greater total profit.
C. Product X should be produced because it provides a greater contribution margin.
D. Both products provide the same total profit.
52.The following information is provided for two products: Assume the products will be sold in a store where shelf space is a scarce resource and there is sufficient room for only one of the two products. Expected sales for Product X are 6,000 units, and expected sales for Product Y are 8,000 units. Which product should be sold and why?
A. Product Y should be sold solely because expected demand is greater.
B. Product Y should be sold because sales of this product will provide a greater profit.
C. Product X should be sold because it provides a greater contribution margin per unit.
D. Product X should be sold because sales of this product will provide a greater profit.
53.Sunk costs:
A. are not considered when evaluating new proposals.
B. differ among the alternatives.
C. impact the future.
D. are relevant.
54.Jack currently works for a law firm full time and earns $60,000 a year. He is thinking of quitting his job to pursue a medical degree. Medical school will cost him $100,000 per year. If Jack quits his job and goes to medical school, the salary he currently earns would be considered what type of cost?
A. Irrelevant cost
B. Sunk cost
C. Opportunity cost
D. Fixed cost
55.Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living’s variable manufacturing costs. Which type of cost is considered a sunk cost to Outdoor Living’s decision of whether to accept or reject the special order?
A. Raw materials to make the 500 hammocks
B. Labor cost to make the 500 hammocks
C. Depreciation on equipment that would be used to make the hammocks
D. Materials handling cost
56.Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living’s total variable manufacturing costs. Which type of cost is considered relevant to Outdoor Living’s decision of whether to accept or reject the special order?
A. Raw materials to make the 500 hammocks
B. Company president’s salary
C. Salary of the production manager
D. Depreciation on equipment that would be used to make the hammocks
57.Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living’s variable manufacturing costs. Variable selling and administrative costs would be unaffected. What is the minimum price that Outdoor Living should accept for the special order?
A. A price equivalent to the hammock’s variable manufacturing cost per unit
B. A price equivalent to the hammock’s unit contribution margin
C. The same price that Outdoor Living charges its existing customers
D. None of these.
58.When evaluating alternatives, what type of costs should be considered?
A. Relevant costs
B. Sunk costs
C. Prevention costs
D. Fixed costs
59.Special order decisions:
A. involve an offer to sell goods at a price that is higher than normal.
B. involve buying goods from other companies rather than making them internally.
C. involve an offer from a customer to buy goods at a lower-than-normal selling price.
D. None of these.
60.Which of the following statements is incorrect?
A. An outsourcing decision typically affects only product-level costs.
B. Accepting a special order will involve incurring unit-level costs.
C. Eliminating a business segment often allows a company to avoid some facility-level costs.
D. Facility-level costs generally are not relevant in special order decisions.
