Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 14, Problem 10RQ
Why might a manager exhibit a behavioral tendency to in appropriately consider sunk costs in making a decision?
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Why might a manager exhibit a behavioral tendency to inappropriately consider sunk costs in making a decision?
Managers often assume a strictly linear relationship between cost and the level of activity.Under what conditions would this be a valid or invalid assumption?
When making decisions, managers should consider
a. revenues that differ between alternatives.
b. costs that do not differ between alternatives.
c. only variable costs.
d. sunk costs in their decisions.
Chapter 14 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 14 - Prob. 1RQCh. 14 - Describe the managerial accountants role in the...Ch. 14 - Distinguish between qualitative and quantitative...Ch. 14 - Prob. 4RQCh. 14 - A quantitative analysis enables a decision maker...Ch. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Is the book value of inventory on hand a relevant...Ch. 14 - Why might a manager exhibit a behavioral tendency...
Ch. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - Prob. 13RQCh. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Briefly describe the proper approach for making a...Ch. 14 - Prob. 17RQCh. 14 - Are allocated joint processing costs relevant when...Ch. 14 - Briefly describe the proper approach to making a...Ch. 14 - What is meant by the term contribution margin per...Ch. 14 - How is sensitivity analysis used to cope with...Ch. 14 - There is an important link between decision making...Ch. 14 - List four potential pitfalls in decision making,...Ch. 14 - Why can unitized fixed costs cause errors in...Ch. 14 - Prob. 25RQCh. 14 - Prob. 26RQCh. 14 - Are the concepts underlying a relevant-cost...Ch. 14 - Prob. 28RQCh. 14 - Redo Exhibit 144 without the irrelevant data.Ch. 14 - Valley Pizzas owner bought his current pizza oven...Ch. 14 - Lamont Industries produces chemicals for the...Ch. 14 - Day Street Delis owner is disturbed by the poor...Ch. 14 - Prob. 35ECh. 14 - Intercontinental Chemical Company, located in...Ch. 14 - Intercontinentals special order also requires...Ch. 14 - Fusion Metals Company is considering the...Ch. 14 - Prob. 39ECh. 14 - Zytel Corporation produces cleaning compounds and...Ch. 14 - Duo Company manufactures two products, Uno and...Ch. 14 - Refer to the data given in the preceding exercise...Ch. 14 - Southern California Chemical Company manufactures...Ch. 14 - Kitchen Magician, Inc. has assembled the following...Ch. 14 - Prob. 45PCh. 14 - Prob. 46PCh. 14 - Tipton One-Stop Decorating sells paint and paint...Ch. 14 - Carpenters Mate, Inc. manufactures electric...Ch. 14 - Casting Technology Resources (CTR) has purchased...Ch. 14 - The Midwest Division of the Paibec Corporation...Ch. 14 - Prob. 51PCh. 14 - Prob. 52PCh. 14 - Upstate Mechanical, Inc. has been producing two...Ch. 14 - Chenango Industries uses 10 units of part JR63...Ch. 14 - Miami Industries received an order for a piece of...Ch. 14 - Prob. 56PCh. 14 - Ozark Industries manufactures and sells three...Ch. 14 - Prob. 58PCh. 14 - Deru Chocolate Company manufactures two popular...Ch. 14 - Prob. 60PCh. 14 - Prob. 61PCh. 14 - Bo Vonderweidt, the production manager for...Ch. 14 - Alberta Gauge Company, Ltd., a small manufacturing...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- How do managers decide whether a cost is adirect or an indirect cost?arrow_forwardWhy do managers consider Direct Coasts to be more accurate than Indirect Costs? How do managers decide whether a cost is a Variable or a Fixed cost? or other important and useful issues/information.arrow_forward1. What factors determine the relevance of information to decision making? 2. What are sunk costs, and why are they not relevant in making decisions? 3. What information is relevant in an outsourcing decision?arrow_forward
- Which of the following costs can be ignored when making a decision?a. Opportunity costs. b. Differential costs. c. Sunk costs. d. Relevant costs.arrow_forwardIn a decision analysis situation, which one of the following costs is generally not relevant to the decision?A. Differential cost.B. Avoidable cost.C. Incremental cost.D. Historical cost.arrow_forwardWhy might management analyze product profitability?arrow_forward
- Why would management be concerned about the accuracy of product costs?arrow_forwardIs there a way to prevent managers from focusing on accounting measures as performance measures?arrow_forwardDiscuss the concept of controllable and uncontrollable costs and how they affect the evaluation of the responsibility centers financial performance.arrow_forward
- What is customer value? How is customer value related to a cost leadership strategy? To a differentiation strategy? To strategic positioning?arrow_forwardAlthough the cost-plus approach to product pricing may be used by management as a general guideline, what are some examples of other factors that managers should also consider in setting product prices?arrow_forwardWhich type of incurred costs are not relevant in decision-making (i.e., they have no bearing on future events) and should be excluded in decision-making? A. avoidable costs B. unavoidable costs C. sunk costs D. differential costsarrow_forward
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