Chapter 8: Review

Which of the following is false? Relevant information always differs among alternatives. Relevant information always regards the future. Relevant information is always financial in nature. Sunk costs are never relevant to a decision.

Keys to making short-term decisions include which of the following? Focusing on relevant revenues, costs, and profits. Using a contribution margin approach that separates variable costs from fixed costs. Both of the above. None of the above.

Which of the following should be considered for special order decisions? Whether excess capacity exists. Whether the special price will be high enough to cover incremental costs of filing the order. Whether the special order will affect regular sales in the long run. All of the listed choices should be considered in special order decisions.

Which is true of price-setters? Their products lack uniqueness. Their pricing approach emphasizes cost-plus pricing. They are in highly competitive markets. Their pricing approach emphasizes target costing.

The formula for arriving at target cost is which of the following? Revenue minus desired profit. Revenue minus actual profit. Cost minus actual profit. Revenue minus variable cost.

Which of the following is not relevant when deciding whether or not to discontinue a product? The product's contribution margin. Avoidable fixed costs related to the product. Unavoidable fixed costs related to the product. The effect of discontinuation on the sales of the company's other products.

A segment margin is the

When resources are constrained, which of the following should be used to guide product mix decisions? The products' gross margin. The products' contribution margin. The products' gross margin per unit of constraint. The products' contribution margin per unit of constraint.

Which of the following is false? Outsourcing decisions are often referred to as "make-or-buy" decisions. Outsourcing refers to having work performed overseas. Contract manufacturers are manufacturers that make products for other companies. Outsourcing decisions should take into consideration the intended use of free capacity.

In making "sell as is" decisions, companies should consider all of the following EXCEPT for: Costs incurred up to the "sell as is" decisions point. Incremental costs that would be incurred by processing further. Incremental revenues that would be earned by processing further. All of the above should be considered.