Faced with a long-run make-or-buy decision, the manager should do all of the following except: a. consider differences in the required capital investment and the timing of cash flows b. compare the cost of making the parts with the cost of buying them c. consider the quantity and quality of the parts as well as the technical know-how required d. use a cost study with only the

Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations? Multiple Choice It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI. It is consistent with the balance sheet presentation of plant and equipment. It eliminates the age of equipment as a factor in ROI computations. It is consistent with the computation of net operating income, which includes depreciation as an operating expense.

Which of the following statements are false?  SELECT ALL THAT APPLY a. One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is. b. A new fixed cost that must be paid if a special offer is accepted is not relevant in making the decision. c. A cost that will be incurred regardless of which course of action a manager takes is relevant to the manager's decision. d. Your Company is considering replacing Machine X. The original cost of Machine X is not relevant to this decision.

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Which of the following statements is true? The use of return on investment (ROI) as a performance measure may lead managers to reject a project that would be favorable for the company as a whole. Land held for possible plant expansion would be included as an operating asset when computing return on investment (ROI).

A decrease in the sales of a current project because of the launching of a new project is A. irrelevant to the investment decision. B. an overhead expense. C. a sunk cost. OD. cannibalization.

Contribution Margin, Cost-Volume-Profit Analysis and Break-Even Point (Overview) Fixed, Variable and Mixed Costs An appreciation of cost behavior is needed in order for management to understand and predict profitability as the costs of material, labor and other operating expenses and levels of production and sales change. It's important to review the cost behavior of fixed, variable and mixed costs before contribution margins, cost-volume-profit analysis, and break-even points. 1.   In the table below, Have-A-Seat Inc. has outlined many of the costs associated with producing office chairs. With respect to the production and sale of office chairs, classify each cost as fixed, mixed, or variable. a.  Pressure-molded plastic for chair frames   b.  Pension cost: $0.50 per employee hour on the job   c.  Insurance premiums for inventory: $2,100 per month plus $0.01 for each dollar of inventory over $2 million   d.  Property taxes: $120,000 per year for the factory building and…