Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Question
Chapter 8, Problem 13MCQ
To determine
Identify the option which is important when a company faces a production constraint or scarce resources.
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(Management Accounting)
If fixed production costs are not allocated to manufactured products, this conveys the idea that ________.
A) fixed costs are not necessary to manufacture a product.
B) fixed costs are necessary to manufacture a product.
C) variable costs are less important than fixed costs to manufacture a product.
D) fixed costs are more important than variable costs to manufacture a product.
The opportunity cost of making a component part in factory with excess capacity for which is no alternative use is:
A. Zero
B. Total production costs of the component
C. Total variable cost of the component
D. Fixed manufacturing costs of the component
Which of the following statements is FALSE?
a.
There is a cause-and-effect relationship between the cost driver and the amount of cost.
b.
Over the long run all costs have cost drivers.
c.
Volume of production is a cost driver of direct manufacturing costs.
d.
Fixed costs have cost drivers over the short run.
Chapter 8 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 8 - What is the difference between tactical and...Ch. 8 - Prob. 2DQCh. 8 - What role do past costs play in relevant costing...Ch. 8 - Explain why depreciation on an existing asset is...Ch. 8 - Give an example of a future cost that is not...Ch. 8 - Can direct materials ever be irrelevant in a...Ch. 8 - Why would a firm ever offer a price on a product...Ch. 8 - What is a segment?Ch. 8 - Prob. 9DQCh. 8 - Discuss the importance of complementary effects in...
Ch. 8 - Prob. 11DQCh. 8 - Suppose that a product can be sold at split-off...Ch. 8 - Prob. 13DQCh. 8 - Which of the following is not a step in the...Ch. 8 - Costs that cannot be affected by any future action...Ch. 8 - Use the following information for Multiple-Choice...Ch. 8 - Use the following information for Multiple-Choice...Ch. 8 - Use the following information for Multiple-Choice...Ch. 8 - Which of the following statements is false? a....Ch. 8 - Prob. 7MCQCh. 8 - In a make-or-buy decision, a. the company must...Ch. 8 - Carroll Company, a manufacturer of vitamins and...Ch. 8 - Prob. 10MCQCh. 8 - Garrett Company provided the following...Ch. 8 - Jennings Hardware Store marks up its merchandise...Ch. 8 - Prob. 13MCQCh. 8 - Prob. 14MCQCh. 8 - In the sell-or-process-further decision, a. joint...Ch. 8 - Structuring a Make-or-Buy Problem Fresh Foods, a...Ch. 8 - Structuring a Special-Order Problem Harrison Ford...Ch. 8 - Segmented Income Statement Gorman Nurseries Inc....Ch. 8 - Prob. 19BEACh. 8 - Prob. 20BEACh. 8 - Structuring the Sell-or-Process-Further Decision...Ch. 8 - Use the following information for Brief Exercises...Ch. 8 - Use the following information for Brief Exercises...Ch. 8 - Calculating Price by Applying a Markup Percentage...Ch. 8 - Calculating a Target Cost Yuhu manufactures cell...Ch. 8 - Structuring a Make-or-Buy Problem Coed Scents, a...Ch. 8 - Structuring a Special-Order Problem Rabbit Foot...Ch. 8 - Prob. 28BEBCh. 8 - Use the following information for Brief Exercises...Ch. 8 - Use the following information for Brief Exercises...Ch. 8 - Structuring the Sell-or-Process-Further Decision...Ch. 8 - Prob. 32BEBCh. 8 - Prob. 33BEBCh. 8 - Prob. 34BEBCh. 8 - Brief Exercise 8-35 Calculating a Target Cost...Ch. 8 - Model for Making Tactical Decisions The model for...Ch. 8 - Prob. 37ECh. 8 - Use the following information for Exercises 8-38...Ch. 8 - Prob. 39ECh. 8 - Prob. 40ECh. 8 - Prob. 41ECh. 8 - Prob. 42ECh. 8 - Prob. 43ECh. 8 - Prob. 44ECh. 8 - Prob. 45ECh. 8 - Sell at Split-Off or Process Further Bozo Inc....Ch. 8 - Use the following information for Exercises 8-47...Ch. 8 - Prob. 48ECh. 8 - Calculating Price Using a Markup Percentage of...Ch. 8 - Target Costing H. Banks Company would like to...Ch. 8 - Keep or Buy, Sunk Costs Heather Alburty purchased...Ch. 8 - Use the following information for Exercises 8-52...Ch. 8 - Use the following information for Exercises 8-52...Ch. 8 - Prob. 54PCh. 8 - Prob. 55PCh. 8 - Segmented Income Statement, Management Decision...Ch. 8 - Make or Buy, Qualitative Considerations Hetrick...Ch. 8 - Sell or Process Further Zanda Drug Corporation...Ch. 8 - Keep or Drop AudioMart is a retailer of radios,...Ch. 8 - Accept or Reject a Special Order Steve Murningham,...Ch. 8 - Cost-Based Pricing Decision Jeremy Costa, owner of...Ch. 8 - Product Mix Decision, Single Constraint Sealing...Ch. 8 - Special-Order Decision, Qualitative Aspects Randy...Ch. 8 - Sell or Process Further, Basic Analysis Shenista...Ch. 8 - Product Mix Decision, Single Constraint Norton...Ch. 8 - Sell at Split-Off or Process Further Eunice...Ch. 8 - Differential Costing As pointed out earlier in...Ch. 8 - Prob. 68CCh. 8 - Keep or Drop a Division Jan Shumard, president and...
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Similar questions
- 1.Choose all of the following statements that are true. a. Opportunity costs and sunk costs are not reflected on a firm's financial statements. b. Direct costs are manufacturing costs; indirect costs are non-manufacturing costs. c. Variable costs are always relevant to a decision. d. Under absorption costing, when a firm increases production, but has the same amount of sales, cost of goods sold decreases. e. Job order costing systems are used only in service industries; process costing systems are used only in manufacturing industries.  2.Which of the following are true about cost behavior within a particular relevant range? (Choose all that apply.) a. Variable costs per unit increase as a company produces more units of production. b. Total fixed cost is constant over all units of production. c. Fixed costs per unit decreases as a company produces less units of production. d. The slope of total variable costs is positive over increasing levels of production.arrow_forward1.2.Choose TRUE or FALSE? Give short explaination? a. In marginal costing method, factory rent is absorbed into cost of production. b. In NPV method, if the projects are not mutually exclusive, the projects with positive NPV. The salaries of administrative staffs are not prime cost. company should accept all C.arrow_forward1.  Costs that do not change with the change in the level of production for some time is classified as ________. variable costs fixed costs mixed costs None of these choices are correct.  2.  Under variable costing, the cost of goods manufactured consists of all except direct materials. direct labor. variable factory overhead. fixed factory overhead.  3.  Costs that have characteristics of both a variable cost and a fixed cost are classified as ________. variable costs fixed costs mixed costs None of these choices are correct.arrow_forward
- The production manager wants to achieve real and permanently decrease in the unit cost of the product. As you are the cost accountant of the company, which of the following concepts explains about real and permeant decrease in the unit cost of the product? a. Cost estimation b. Cost analysis c. Cost control d. Cost reductioarrow_forwardWhich of the following statements is false?  I. Absorption Costing Method differs from Variable Costing Method in terms of Fixed Manufacturing Overhead Cost. II. When production level are expected to decline within a relevant range, Fixed costs per unit increases and Variable Cost per unit decreases. III. Determining the "right" level of capacity is one of the most strategic and difficult decisions managers face. III. Variable Costing differs to Absorption costing only in one aspect, that is how to account for Fixed Manufacturing costs.  a. I    b. II    c. III    d. IV    e. None of the statements is false.arrow_forwardWhich of the following points about the Activity-based costing (ABC) system is NOT a correct observation:   a. Under ABC the unit cost of a product will necessary be less than the unit cost under traditional full (absorption) costing.  b. Activities are considered resource drivers because they eat up resources necessary for the activities to happen.  c. ABC may generate results that are not suitable for external reporting under IFRS/GAAP.  d. Batch-level activities produce costs that may be in proportion to the number of units produced.arrow_forward
- When operating in a constrained environment, which products should be produced? A. products with the highest contribution margin per unit B. products with the highest contribution margin per unit of the constrained process C. products with the highest selling price D. products with the lowest allocated joint costarrow_forwardExplain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwide rates to assign cost accurately.arrow_forwardWhy is the direct labor cost category eliminated in many lean manufacturing environments?arrow_forward
- Which of the following is an example of a variable cost? a.Insurance on the production equipment b.Direct materials c.The production supervisor's salary d.Depreciation of the factory building e.None of thesearrow_forwardA by-product is best described as * Â a. A product that s produced from materials that would otherwise be considered scrap. b. A product that has a lower selling price than the main product. c. A product manufactured along with the main product, a sales value that does not cover its cost of production. d. A product that usually yields a small amount of revenue when compared to the revenue from the main product.arrow_forwardExplain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwiderates to assign cost accurately.arrow_forward
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