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Exam 8: Tactical Decision-Making and Relevant Costing

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Question 41

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In order to be classified as a _________________, a cost must possess these two characteristics: 1) they are future costs and 2) they differ across alternatives.

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Question 42

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The first step in making a short-run decision is to identify alternatives as possible solutions to the problem.

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Question 43

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__________________ have common processes and costs of production up to a split-off point.

The benefit sacrificed when one alternative is chosen over another is called sunk cost.

Cherry Company makes telephones.Currently, Cherry makes all the components of the telephones in-house.An outside company has offered to supply one component, part number X76, for $15 each.Cherry uses 15,000 of these components per year.Costs of X76 are as follows: Assume that all of the fixed overhead is allocated and cannot be avoided.Should Cherry purchase the part from the outside supplier?

Which of the following is used to solve product mix problems with multiple constraints?

The decision on whether to produce a product internally or purchase it from a supplier is an example of a _______________.

Manning Company uses a joint process to produce products W, X, Y, and Z.Each product may be sold at its split-off point or processed further.Additional processing costs of specific products are entirely variable.Joint processing costs for a single batch of joint products are $120,000.Other relevant data are as follows: Which products should Manning process further?

Target costing is a method of determining the cost of a product or service based on the price (target price) that customers are willing to pay.

Limited resources or a limited demand for a product are examples of ______________.

Pericloud Company produces a product that has a regular selling price of $500 per unit.At a typical monthly production volume of 4,000 units, the product's average unit cost of goods sold amounts to $300.Included in this average is $150,000 of fixed manufacturing costs.All selling and administrative costs are fixed and amount to $40,000 per month. Pericloud Company has just received a special order for 2,000 units at $280 per unit.The buyer will pay for transportation, and the regular selling price will not be affected if Pericloud accepts the order. Assuming Pericloud Company has excess capacity, the effect on profits of accepting the order would be a:

Sabor Inc.is a medical testing laboratory that performs several tests and analyses for hospitals in the area.Four of the tests that they perform require the use of a specialized machine that can supply 14,000 hours per year.Information on the four lab tests follows: - What is the contribution margin per hour of machine time for Test C?

Autry Company manufactures veterinary products.One joint process involves refining a chemical (dactylyte) into two chemicals ? dac and tyl.One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons of dac and 3,000 gallons of tyl at a total joint processing cost of $12,000.At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon.Autry has just learned of a new process to convert dac into prodac.The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac.Prodac sells for $5 per gallon. Should Autry process dac further?

Which of the following could be considered a segment?

Future costs that differ across alternatives are relevant costs.

Stadium Company charges cost plus 60%.If the price of an item is $260, what is the item's cost?

Matching ​ Match each statement with the correct item below. -​Markup

The percentage that is applied to the base cost is known as the _____________.

______________ is the point at which products become distinguishable after passing through a common process.

Which of the following is not a step in the decision-making model?