Acct434 Advanced Cost Management: Week 3 Cost Behavior Decision Making Quality (Version 1)

Reminder: There are several versions of this week’s questions, please make sure you have reviewed and compared our questions with your questions.

Acct434 Advanced Cost Management
Week 3 Cost Behavior Decision Making Quality (Version 1)

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?
a. Variable
b. Mixed
c. A variable cost within a relevant range
d. A fixed cost within a 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?
a. y = 1.80 + 400X
b. y = 400 +1.80X
c. y = 2.20 + 1,000X
d. y = 1.00 + 400X


3. (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?
a. The account analysis method
b. The conference method
c. The industrial engineering method
d. The quantitative analysis method

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 20X8 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 are the estimated total costs if Penny’s expects to sell 3,000 units next year?
a. $896,000
b. $678,000
c. $1,017,000
d. $799,000

5. (TCO 4) The formal process of choosing among alternatives is known as a(n)
prediction model.
alternative model.
decision model.
relevant model.

6. (TCO 4) When using the five-step decision process, which one of the following steps should be done last?
Implementing the decision
Evaluation and feedback
Choose an alternative
Obtain information

7. (TCO 4) Sunk costs
a. have future implications.
b. are ignored when evaluating alternatives.
c. are differential.
d. are relevant.

8. (TCO 4) Northwoods Incorporated manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Northwoods’ policy to add a 50% markup to full costs.

A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Northwoods is invited to submit a bid to the hotel chain. What is the lowest price per unit Northwoods should bid on this long-term order?
a. $63
b. $72
c. $90
d. $135

9. (TCO 5) Throughput contribution equals revenues minus
a. operating costs
b. direct material in costs of goods sold
c. direct material costs and minus operating costs
d. direct material and direct labor costs

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
a. eliminating idle time at the bottleneck operation. Extra staffing at the bottleneck would be a possibility, particularly if numerous manual type tasks were involved.
b. concentrate on processing those parts or products that increase throughput contribution, not parts or products that remain in finished goods or spare parts inventories.
c. solicit the opinions of the factory workers for ideas as to how the design of the manufacturing process can be simplified.
d. All of the above
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