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Exam 8: Tactical Decision-Making and Relevant Costing

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Question 31

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A ____________ is a subunit of a company of sufficient importance to warrant the production of performance reports.

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Question 32

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At split-off, the joint costs of production for joint products are not relevant to the sell-or-process-further decision.

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Question 33

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The following information pertains to Chrysnta Company's three products: Assume that product C is discontinued and an extra space is rented for $800 per month.All other information remains the same as the original data.Annual profits will:

Abbott Company is considering purchasing a new machine to replace a machine purchased one year ago that is not achieving the expected results.The following information is available: Which of these items is irrelevant?

Amaryliz Products had the following unit costs: A one-time customer has offered to buy 4,000 units at a special price of $60 per unit.Because of capacity constraints, 1,000 units will need to be produced during overtime.Overtime premium is $15 per unit.How much additional profit or loss will be generated by accepting the special order?

Connolly Company produces two types of lamps, classic and fancy, with unit contribution margins of $13 and $21, respectively.Each lamp must spend time on a special machine.The firm owns four machines that together provide 18,000 hours of machine time per year.The classic lamp requires 0.20 hours of machine time, the fancy lamp requires 0.50 hours of machine time. ? - What is the contribution margin per hour of machine time for a classic lamp?

In determining the target price of a good, the company must first determine the target cost and the desired profit.

Gerberal Company charges cost plus 40%.What is the price of an item with cost equal to $100?

In making a short-run decision, all alternatives need to be considered.

A cost that cannot be affected by any future action is called a(n) _______________.

Daisy Bath Products, Inc.(DBP) makes a variety of ceramic sinks and tubs.DBP has just developed a line of sinks and tubs made from a mixture of glass and ceramic.The sinks sell for $200 each and have variable costs of $70.The tubs sell for $700 and have variable costs of $320.The glass and ceramic sinks and tubs require the use of specialized molding equipment.The specialized molding equipment has 5,000 hours of capacity per year.A sink uses an average of 5 hours of specialized molding equipment time; a tub uses an average of 6 hours of specialized molding equipment time. What is the contribution margin per hour of specialized molding equipment time for sinks?

Gladiol sets prices at cost plus 65%.The cost of an aquarium start-up kit is $100.What price does Gladiol Supplies charge for the aquarium start-up kit?

Demand is one side of the pricing equation; supply is the other side.

Which of the following is a key point considered in a special order decision?

Irrelevant costs are costs that are the same for more than one alternative.

A situation in which management tells divisions that they must reduce costs by 10% is called target costing.

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

____________________ consists of choosing among alternatives with an immediate or limited end in view.

Typically in a special-order decision, a customer wants to pay more than the usual price.

Shear-it, Inc., produces paper shredders.Shear-it is considering a new shredder design for home offices.The marketing vice president believes that a basic unit in a variety of attractive colors could be sold for $70.Shear-it requires that all new products yield 30% profit.What is the target cost of the new shredder?