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Multiple Choice Quiz
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1
Six steps characterize the decision making process, four of these steps have been listed below.
  1. Identify the alternatives
  2. Collect the data
  3. Develop a decision model
  4. Clarify the decision problem
Select the choice that puts the steps in the proper order.
A)(ii), (iv), (iii), (i)
B)(iii), (iv), (ii), (i)
C)(iv), (iii), (i), (ii)
D)(iv), (i), (iii), (ii)
E)None of the above
2
Which of the following is a qualitative characteristic?
A)The airline uses an average of 120 meals per scheduled interstate flight.
B)Airline passengers rate the meals as poor to excellent.
C)Twenty percent of the airline dinner meals served have a dish that includes chicken.
D)Vendor A delivers the airline meals on time, 98% of the time.
E)None of the above
3
Willow Corporation is trying out a new advertising approach in a mid-western test market. Willow is anxious for the results as the campaign is expected to take the company in an entirely new marketing direction. Please consider the characteristics of useful information and complete the following statements:

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A)
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B)
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C)
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D)
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E)None of the above
4
Which of the following statements is false?
A)Unique decisions arise infrequently.
B)Repetitive decisions are made over and over again.
C)When compared to repetitive decisions, information relevant to unique decisions is harder to generate.
D)Relevant information for repetitive decisions must involve costs or benefits that are similar between alternatives.
E)Relevant costs differ between alternatives.
5
Seven years ago, Snap Company purchased a parcel of land adjacent to its factory for $15,000. Over the next few years, Snap spent $8,000 demolishing an existing building and making other improvements such that the site was suitable for construction. Snap believes if they were to list the land for sale it would fetch a sales price of approximately $32,000. The county assessor has appraised the land at $28,000 for real estate tax purposes. A neighboring business (anxious to expand) has recently offered Snap $40,000 for the parcel. Assuming Snap does not accept the offer to sell, what are the sunk costs related to this transaction?
A)$15,000
B)$28,000
C)$32,000
D)$23,000
E)$40,000
6
Seven years ago, Snap Company purchased a parcel of land adjacent to its factory for $15,000. Over the next few years, Snap spent $8,000 demolishing an existing building and making other improvements such that the site was suitable for construction. Snap believes if they were to list the land for sale it would fetch a sales price of approximately $32,000. The county assessor has appraised the land at $28,000 for real estate tax purposes. A neighboring business (anxious to expand) has recently offered Snap $40,000 for the parcel. Assuming Snap does not accept the offer to sell what is the opportunity cost related to this decision?
A)$15,000
B)$28,000
C)$32,000
D)$23,000
E)$40,000
7
Consider the following costs of two alternatives for equipment replacement:
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What is the total differential cost of replacing the old lathe?
A)$3,000
B)$2,000
C)$7,000
D)$4,000
E)$14,000
8
Consider the following:
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The company has no excess capacity. Which of the following is true if the company accepts a special offer of $8 per unit for 10,000 units?
A)The company should accept the special offer.
B)The company will be $20,000 worse off by accepting the special order.
C)The per-unit fixed cost will increase.
D)Both (B) and (C) are true.
E)None of the above is true.
9
Consider the following cost per unit for a component of a finished product:
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Each finished product uses one component. Production of 2,000 finished products is expected each accounting period. Which of the following is true?
A)If components are outsourced, the firm will gain $1,500.
B)If components are outsourced, the firm will gain $3,000
C)If components are outsourced, the firm will lose $1,500.
D)The components should be outsourced.
E)The components should not be outsourced.
10
Consider the following:
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If the Paint Department is discontinued, what will be the change in profit or loss for the company?
A)Profit will increase $5,000.
B)Profit will decrease $2,000.
C)Profit will increase $1,000.
D)Profit will increase $18,000.
E)Profit will increase $17,000.
11
Consider the following:
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Joint product costs are allocated to products on the basis of the relative quantity produced at split-off.
What are the total joint cost and the allocated joint cost to Peanut oil, respectively?
A)$3,000 and $1,000
B)$2,000 and $200
C)$3,000 and $200
D)$720 and $72
E)$840 and $84
12
The cost of Oak logs is $120 per thousand board feet. Typically, an Oak log can be cut into three grades of lumber: Floor, Cabinet, and Furniture, in a ratio of 5:4:1. The sales values of the three grades are $400, $200, and $400 per thousand board feet, respectively. Ten thousand board feet of Oak logs were purchased and processed. How much of this joint cost should be allocated to the Floor grade under the relative sales value method?
A)$600
B)$1,000
C)$750
D)$300
E)$800
13
Consider the following:
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The expected contribution per machine hour is closest to:
A)The expected contribution per machine hour for Product A is $77.40.
B)The expected contribution per machine hour for Product B is $86.00.
C)The expected contribution per machine hour for Product B is $62.14.
D)The expected total contribution per machine hour is $99.00.
E)The expected total contribution per machine hour is $102.14.
14
Which of the following will relax a constraint?
A)Outsourcing all or part of the bottleneck operation
B)Working overtime at the bottleneck operation
C)Retraining employees and shifting them from the bottleneck
D)Eliminate all parallel processing.
E)Options (A) and (B)
15
Consider the following:
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Direct material and direct labor costs for packaging are $100,000 and $120,000, respectively. The bid from an outside vendor to provide the packaging is $320,000. Which of the following is true?
A)The total relevant cost to the outsourcing decision is $148,100.
B)The total relevant cost to the outsourcing decision is $220,000.
C)The supervisory salaries and purchase order costs are not relevant.
D)If the packaging function were outsourced all of the fixed overhead costs would be eliminated.
E)None of the above is true.





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