1. (TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified? (Points : 3)
Fixed cost within relevant range
Variable
Mixed
Variable cost within relevant range
2. (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected to be produced in the coming year. What cost function best represents these costs? (Points : 3)
y = 1.80 + 400X
y = 400 + 1.80X
y = 2.20 + 1,000X
y = 1.00 + 400X
3. (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions based on past data? (Points : 3)
Quantitative analysis
Industrial engineering
Account analysis
Conference
4. (TCO 3) Penny’s TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 20X2 operations. Sales (2,000 televisions) $900,000; Cost of goods sold $400,000; Store manager’s salary per year $70,000; Operating costs per year $157,000; Advertising and promotion per year $15,000; Commissions (4% of sales) $36,000. What was the variable cost per unit sold for 20X2? (Points : 3)
$200
$339
$218
$18
5. (TCO 4) The formal process of choosing among alternatives is known as a(n) (Points : 3)
prediction model.
alternative model.
decision model.
relevant model.
6. (TCO 4) For decision making, a listing of the relevant costs (Points : 3)
will help the decision maker concentrate on the pertinent data.
will only include future costs.
will only include costs that differ among alternatives.
All of the above
7. (TCO 4) A computer system installed last year is an example of a(n) (Points : 3)
avoidable cost.
differential cost.
relevant cost.
sunk cost.
8. (TCO 4) Black Tool Company has a production capacity of 1,500 units per month, but production is only 1,250 units. The manufacturing costs are $60 per unit and marketing costs are $16 per unit. Doug Hall offers to purchase 250 units at $76 each for the next five months. Should Black accept the one-time-only special order if only absorption-costing data are available? (Points : 3)
Yes, since operating profits will most likely increase.
No, since only the employees will benefit.
No, the company will only break even.
Yes, good customer relations are essential.
9. (TCO 5) The theory of constraints is used for cost analysis when (Points : 3)
a manufacturing company produces multiple products and uses multiple manufacturing facilities and/or machines.
using a long-term time horizon.
operating costs are assumed fixed.
All of the above
10. (TCO 5) A machine has been identified as a bottleneck and the source of the constraint for a manufacturing company that has multiple products and multiple machines. One way the company can overcome the bottleneck is (Points : 3)
eliminating idle time at the bottleneck operation. Extra staffing at the bottleneck would be a possibility, particularly if numerous manual type tasks were involved.
concentrate on processing those parts or products that increase throughput contribution, not parts or products that remain in finished goods or spare parts inventories.
solicit the opinions of the factory workers for ideas as to how the design of the manufacturing process can be simplified.
All of the above
