Acct. Ch 8

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relevant cost

expected future costs that differ among alternatives

fixed costs that do not differ between two alternatives are

irrelevant to the decision

which is a sunk cost

purchase price of the vehicle to be traded in

fixed costs to be avoided in the future are

relevant costs

the format of the income statements most useful in decision making is which of the following?

contribution margin format.

in a special sales order decision, the special price must exceed the variable cost of filling the order. in other words the special order must have:

a postive contribution margin.

in a special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be

relevant to the decision.

A manager should always reject a special order if

the special order price is less than the variable costs of the order.

The cost plus price is described by which of the following

total cost plus desired profit.

target total cost is described by which of the following:

revenue at market price minus desired profit.

managers must consider which of the following when pricing a product or service

all costs

which of the following pairs are characteristics of price takers

target costing and heavy competition.

which of the following pairs are characteristics of price setters.

cost-plus pricing and less competition.

stockholders expectations of of a company profits are affected by which of the following

all of the above

which of the following describes the products and services of companies that are price setters

they tend to be unique.

big box retailers such as lowes are considered price takers because

their products are not unique.

methods for a company to meet target total cost and the profit goals if the current cost of the product is higher than the target cost include which of the following

any of the above.

unavoidable fixed costs are

irrelevant to the decision of whether to discontinue a product line because they will not differ between alternatives.

common fixed costs that are allocated between departments are generally

irrelevant to the decision of whether to discontinue the department.

fixed costs that are allocated among all departments are known as

common fixed costs

all of the following are considerations for discontinuing a product or product line, except

not having any free capacity.

fixed costs that continue to exist even after a product line is discontinued are called

unavoidable fixed costs

all of the following are product mix considerations except

which product has the most sunk costs

the contribution margin per unit of constraint is calculated as

contribution margin per unit x units per constraint

companies with production constraints and irrelevant fixed costs will be most profitable when they maximize production of the product with the highest

contribution margin per unit of the constraint.

the factor that restricts production or sale of a product is which of the following

constraint

a sales mix is best described by which of the following?

the relative number of all products to be sold.

all of the following are outsourcing considerations, except

how do our fixed costs compare to the outsourcing cost.

in a sell or process futher decision, the company should process further if

the extra cost of processing further is less than the extra revenue.

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