Question : Objective 11.1 1) A decision model involves a(n) ________. A) informal method : 1211757

 

 

Objective 11.1

 

1) A decision model involves a(n) ________.

A) informal method of making a choice at the lower level management using sensitivity analysis

B) formal method of making a choice that often involves both quantitative and qualitative analyses

C) informal method of making a choice which is discussed in detailed in the financial reports

D) formal method of making a choice at the lower level management using advanced management techniques such as balance scorecard

 

2) Feedback regarding previous actions may affect ________.

A) future predictions

B) implementation of the decision

C) the decision model

D) All of these answers are correct.

 

3) Place the following steps from the five-step decision process in order:

 

A = Obtain information including historical costs

B = Evaluate performance to provide feedback

C = Make decisions choosing among alternatives

D = Make predictions about the future

E = Identify the problem and uncertainties

 

A) A, E, D, B, C

B) C, D, E, A, B

C) E, A, D, C, B

D) D, C, B, A, E

4) The formal process of choosing between alternatives is known as a(n) ________.

A) relevant model

B) decision model

C) alternative model

D) prediction model

 

5) Lander Metals Inc. manufactures automobile spare parts for car manufacturers. Management is attempting to search for ways to reduce manufacturing labor costs and has received a proposal from a consulting company to rearrange the production floor next year. Using the information below regarding current operations and the new proposal, which of the following decisions should management accept?

 

CurrentProposed

Required machine operators1612

Materials-handling workers3.003.00

Employee average pay$15 per hour$18 per hour

Hours worked per employee3,4003,150

 

A) Do not change the production floor.

B) Rearrange the production floor.

C) Either, because it makes no difference to the employees.

D) It doesn’t matter because the costs incurred will remain the same.

Answer the following questions using the information below:

 

Contrafic Lighting manufactures small flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.

 

CurrentProjected

Demand75,000 units68,000 units

Selling price$8.50$9.25

Incremental cost per unit$4.80$4.80

 

6) If the price increase is implemented, operating profit is projected to ________.

A) increase by $25,100

B) decrease by $5,250

C) increase by $5,250

D) decrease by $7,000

 

7) Would you recommend the 75-cent price increase?

A) No, because demand decreased.

B) No, because the selling price increases.

C) Yes, because contribution margin per unit increases.

D) Yes, because operating profits increase.

 

8) When using the five-step decision process, which one of the following steps should be done last?

A) obtain information

B) choose an alternative

C) evaluation and feedback

D) implementing the decision

9) When using the five-step decision process, which one of the following steps should be done first?

A) obtain information

B) choose an alternative

C) evaluation  and feedback

D) implementing the decision

 

10) A decision model is an informal method for making a choice, using simpler methods like surveying.