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| 1 | |
What is the first step in the decision making process? |
| | A) | Specify the criteria by which the decision is to be made. |
| | B) | Consider the strategic issues regarding the decision context. |
| | C) | Perform an analysis in which the relevant information is developed and analyzed. |
| | D) | Perform an on-going evaluation of the effectiveness of the decision. |
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| 2 | |
When is depreciation NOT considered a sunk cost in decision-making? |
| | A) | When deciding whether or not to accept a special order. |
| | B) | When deciding whether or not to upgrade factory equipment. |
| | C) | When determining the optimal product mix. |
| | D) | When tax effects are considered. |
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| 3 | |
Committed or sunk costs are generally: |
| | A) | Not fixed. |
| | B) | Small in amount. |
| | C) | From bad decisions. |
| | D) | In the past. |
| | E) | Recoverable in trade. |
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| 4 | |
Operating at or near full capacity is particularly important for a firm considering: |
| | A) | Which product line is most profitable. |
| | B) | Which products have achieved breakeven. |
| | C) | The sell before or after additional processing decision. |
| | D) | A special order decision. |
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| 5 | |
The value chain analysis in make-lease-buy decisions often leads a firm to make use of: |
| | A) | Benchmarking. |
| | B) | Cycle time implementation. |
| | C) | Outsourcing. |
| | D) | Functional combination. |
| | E) | Total quality management. |
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| 6 | |
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025532/966308/ch11_q6_1.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (28.0K)</a>]]>What is the maximum price that Berry would be willing pay for the parts? |
| | A) | $21.80 per unit |
| | B) | $25.00 per unit |
| | C) | $23.00 per unit |
| | D) | $20.20 per unit |
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| 7 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025532/966308/ch11_q6_1.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (28.0K)</a>]]>What is the effect on income if Berry purchases the component parts from the supplier? |
| | A) | $36,000 increase |
| | B) | $180,000 increase |
| | C) | $606,000 decrease |
| | D) | $144,000 increase |
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| 8 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025532/966308/ch11_q6_1.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (28.0K)</a>]]>Which of the following would Berry be least concerned about when analyzing to the above make-or-buy decision? |
| | A) | How long will the supplier provide the $19 price on the component part? |
| | B) | Will the component part be delivered on time? |
| | C) | Will the component part meet Berry's quality standards? |
| | D) | Is Berry's capacity equal to 30,000 units? |
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| 9 | |
Boone Company produces a product that can be sold for $50,000 at an intermediate stage of processing. If Boone adds additional processing to the product, Boone will incur $15,000 of additional material costs and another $10,000 in labor and overhead costs. When finished, Boone will be able to sell the product for $90,000.
Which of the following answers is correct? |
| | A) | Sell now |
| | B) | Finish the product because profits will increase by $40,000. |
| | C) | Finish the product because profits will increase by $25,000. |
| | D) | Finish the product because profits will increase by $15,000. |
| | E) | Finish the product because profits will increase by $65,000. |
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| 10 | |
The decision to keep or drop products or services involves strategic consideration of all the following except: |
| | A) | potential impact on remaining products or services. |
| | B) | total variable costs |
| | C) | impact on employee morale and organizational effectiveness. |
| | D) | available production capacity |
| | E) | growth potential of the firm. |
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| 11 | |
Heartland Health Club plans to expand their swimming programs. They will receive $40,000 from the city and another $16,000 from the local United Way for the program. Heartland has determined that they will need to hire two full-time swimming instructors for $26,000 each and will incur another $20,000 in operating costs. If they project that 1,000 children will take swimming lessons, how much will Heartland need to charge per child in order to breakeven? |
| | A) | $56.00 |
| | B) | $72.00 |
| | C) | $16.00 |
| | D) | $12.00 |
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| 12 | |
Situations involving multiple products can be difficult to solve when there are limited resources. The best guide for decision in these cases is: |
| | A) | contribution margin. |
| | B) | net profit per unit of product. |
| | C) | contribution margin per unit of scarce resource |
| | D) | total expense. |
| | E) | total revenues. |
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| 13 | |
A useful guide to solving profitability analysis problems with multiple products and multiple resource constraints is: |
| | A) | Contribution per unit of scarce resource. |
| | B) | Constraint analysis. |
| | C) | Corner point analysis. |
| | D) | Operating Leverage. |
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| 14 | |
A situation in which a firm sets prices below variable cost is called: |
| | A) | sales promotion. |
| | B) | expense control. |
| | C) | predatory pricing. |
| | D) | long-term strategic pricing. |
| | E) | market penetration |
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| 15 | |
Which of the following is NOT a behavioral or implementation issue regarding strategic decision-making? |
| | A) | Lack of long long-term focus. |
| | B) | Predatory pricing. |
| | C) | Replacement of fixed costs with variable costs. |
| | D) | Proper identification of relevant costs. |
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