Deck 7: The Use of Cost Information in Management Decision Making

Question 1

Common costs are not directly traceable to an individual product line.

Answer 1

True

Question 2

Sunk costs are incremental costs because they increase or decrease with the choice of one alternative over another.

Answer 2

False

Question 3

In deciding whether to sell or process further, the costs that have been incurred to process the product to the split-off point are incremental costs.

Answer 3

False

Question 4

Two or more products which result from common inputs are called cut-off products.

Question 5

In a make-or-buy decision, direct materials and direct labor are usually incremental costs.

Question 6

The stage of production at which individual products are identifiable is referred to as the spin-off point.

Question 7

In a make-or-buy decision, the original purchase price of equipment that is currently used in the manufacturing process is usually a relevant cost because the equipment can be sold for its salvage value.

Question 8

The proper way to analyze the decision to drop a product line is to compare sunk costs to incremental costs.

Question 9

Allocating joint costs to products based on physical quantities will make all of the products have the same gross margin ratio if they are sold at the split-off point.

Question 10

If a company decides to eliminate a product, fixed costs allocated to that product line will be avoided.

Question 11

Avoidable costs are always relevant.

Question 12

Differential costs are relevant in decision-making.

Question 13

The best way to allocate the cost of common inputs to joint products is based on the physical quantities of the outputs.

Question 14

Decision alternatives that provide the largest incremental profit are always the best option.

Question 15

Fixed costs are always sunk costs.

Question 16

Opportunity costs represent the benefits foregone by selecting one alternative over another.

Question 17

When deciding whether to eliminate a segment, the segment should be dropped if its contribution margin less the avoidable fixed costs is positive.

Question 18

Avoidable fixed costs are incremental in a make-or-buy decision.

Question 19

Avoidable costs are always incremental to business decisions.

Question 20

Incremental profit is the additional revenue received as a result of selecting one decision alternative over another.

Question 21

A product line should be dropped when

A)it has a positive contribution margin.
B)it has unavoidable fixed costs.
C)there will be a positive change in income if the product line is dropped.
D)All of these answer choices are correct.

Question 22

A primary disadvantage of using an outside supplier is that the supplier may not be able to deliver the needed parts or components on a timely basis.

Question 23

A company is trying to decide whether to sell partially completed goods in their current state or incur additional costs to finish the goods and sell them as complete units.Which of the following is not relevant to the decision?

A)The selling price of the completed units
B)The costs incurred to process the units to this point
C)The selling price of the partially completed units
D)The costs that will be incurred to finish the units

Question 24

Which one of the following is the preferred alternative when deciding between two alternatives?

A)No opportunity or sunk costs exist.
B)Revenues are greater than under the other alternatives.
C)Expenses are less than under the other alternatives.
D)Incremental profit is greater than under the other alternatives.

Question 25

When a department or product line is dropped, the common fixed costs that had been allocated to that department

A)are eliminated.
B)become variable costs.
C)are allocated to the remaining departments or product lines.
D)become sunk costs.

Question 26

Which of the following statements is(are) true concerning common costs?
I)They are costs that are directly traceable to an individual product line.
II)They are normally avoidable.

A)I only
B)II only
C)Both I and II
D)Neither I nor II

Question 27

Which of the following is most likely relevant in a make-or-buy decision?

A)Unavoidable costs
B)Sunk costs
C)Incremental revenues
D)Opportunity costs

Question 28

Which of the following is a direct cost of a specific department in a retail store?

A)Supplies used in cleaning the store
B)Rent of the store
C)Utilities used by the store, such as electricity
D)Cost of the department manager's salary

Question 29

Which of the following is a cost that does not differ between decisions?

A)Controllable costs
B)Opportunity costs
C)Unavoidable costs
D)Incremental costs

Question 30

You have tickets to go to Jamaica over spring break.Just this week your best friend informs you that he (she) is getting married over spring break.Your friend would like you to stay back in the city and be the wedding attendant.The tickets to Jamaica are nonrefundable.
Which of the following is a sunk cost relating to your decision of attending the wedding or going on the trip to Jamaica?

A)The cost of the airline tickets to Jamaica
B)The cost of wedding gift
C)The cost of the clothing you will have to buy/rent to be in the wedding
D)The cost of the rent on your apartment for the month

Question 31

The qualitative aspects of a decision must receive the same careful attention as the quantitative aspects.

Question 32

Costs that will be eliminated if a particular course of action is undertaken are called

A)sunk costs.
B)opportunity costs.
C)accounting costs.
D)avoidable costs.

Question 33

The value of benefits foregone by selecting one decision alternative over another is a(n)

A)unavoidable cost.
B)incremental benefit.
C)differential revenue.
D)opportunity cost.

Question 34

Harrison Enterprises currently produces 8,000 units of part B13.Current unit costs for part B13 are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 12 \\\text { Direct labor } & 9 \\\text { Factory rent } & 7 \\\text { Administrative costs } & 10 \\\text { General factory overhead (allocated) } & \underline { 7 } \\\text { Total } & \$ 45\end{array}$$ If Harrison decides to buy part B13, 50% of the administrative costs would be avoided.All of the company's items, including part B13, are manufactured in the same rented production facility.The company has an offer from a wholesaler that wishes to sell the part to Harrison for $31 per unit.What will occur if the company accepts the offer?

A)The cost for this part will increase by $5 per unit.
B)The cost for this part will be the same.
C)The cost for this part will decrease by $14 per unit.
D)The cost for this part will decrease by $10 per unit.

Question 35

Which of the following is quite often not incremental?

A)Direct labor
B)Direct material
C)Variable manufacturing overhead
D)Fixed manufacturing overhead

Question 36

Which of the following is a cost that was incurred in the past that will never be incremental?

A)Sunk costs
B)Opportunity costs
C)Avoidable costs
D)Relevant costs

Question 37

A company is trying to decide whether to keep or drop the organic foods department in its grocery store.If organic foods are dropped, the manager will be laid off.What is the manager's salary in relation to the decision to keep or drop the department?

A)An opportunity cost and therefore relevant
B)Avoidable and therefore incremental
C)Sunk and therefore not relevant
D)The same for all alternatives and therefore not relevant

Question 38

One advantage of using an outside supplier is the possibility that the outside supplier is particularly efficient at manufacturing the needed part or component.

Question 39

Wilson is currently producing a component for one of its products.Wilson has received an offer to buy the component from an outside supplier.A machine is currently being rented to manufacture the component.If the company buys the component, the rental will be cancelled.What is the rent on the machine, in relation to the decision to make or buy the component?

A)Sunk and therefore not relevant
B)Avoidable and therefore not relevant
C)Avoidable and therefore relevant
D)Unavoidable and therefore relevant

Question 40

Which of the following is never considered in incremental analysis?

A)Incremental revenue
B)Sunk costs
C)Incremental profit
D)Differential costs

Question 41

Blue Chip Company sells gears for $9 per unit.The unit cost of each gear follows: $$\begin{array} { l r } \text { Direct materials } & \$ 1.50 \\\text { Direct labor } & 2.20 \\\text { Manufacturing overhead } & 2.10 \\\text { Total } & \$ 5.80\end{array}$$ An order to purchase 4,000 gears was recently received from a new customer.There is enough capacity to fill the order and filling this order would not disrupt current operations.Blue Chip Company would incur an additional $1.80 per gear for shipping costs.Half of the manufacturing overhead costs are fixed and would be incurred no matter how many units are produced.In negotiating a price, how much is the minimum acceptable selling price?

A)$7.60
B)$5.80
C)$4.75
D)$6.55

Question 42

Watson Wheels currently makes 6,000 wheels annually that are used in other products it manufactures.Current unit costs for the wheels are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 22.00 \\\text { Direct labor } & 16.00 \\\text { Variable manufacturing overhead } & 12.00 \\\text { Fixed manufacturing overhead } & 15.00 \\\text { Total } & \$ 65.00\end{array}$$ The company has an offer from a manufacturer to produce the wheels for $60 per wheel.If the company decides to buy the wheels, the empty warehouse space could be rented for $22,000 annually.In addition, half of the fixed manufacturing overhead costs would be avoided if the company decides to buy the wheels.If the company decides to accept the offer, what is the incremental effect on the company's net income?

A)A savings of $7,000
B)A savings of $37,000
C)A decrease in net income of $15,000
D)An increase in net income of $52,000

Question 43

Mel's Diner owns a single restaurant, which has a cantina primarily used to seat patrons while they wait on their tables.The company is considering eliminating the cantina.Segmented contribution income statements are as follows and fixed costs applicable to both segments are allocated on the basis of square footage. $\begin{array}{lrrr}&\text { Restaurant }& \text { Cantina } &\text { Total }\\\text { Sales } & \$ 800,000 & \$ 200,000 & \$ 1,000,000 \\\text { Variable costs } & 475,000 & 160,000 & 635,000 \\\text { Direct fixed costs } & 50,000 & 15,000 & 65,000 \\\text { Allocated fixed costs } & 212,500 & 37,500 & 250,000 \\\text { Net income } & \$ 62,500 & (\$ 12,500) & \$ \$ 50,000\end{array}$ What effect will occur if Mel's Diner eliminates the cantina if there is no effect on restaurant sales?

A)Net income will increase by $12,500.
B)Net income will decrease to $37,500.
C)Net income will decline by $25,000.
D)Net income will be $62,500.

Question 44

Denray Deli has two locations, downtown and in the town mall.During March, the company reported total net income of $144,000 with sales of $1,200,000.The contribution margin in the downtown store was 30%.The contribution margin in the town mall store is $80,000.Total fixed costs are allocated as $110,000 in the downtown store and $90,000 in the town mall location.How much are sales at the downtown location?

A)$880,000
B)$1,146,667
C)$254,000
D)None of these answer choices are correct.

Question 45

Conviser Tools manufactures a number of products from the same raw material.Joint processing costs total $10,000.Product A could be sold at the cut-off point for $18,000 or it can be further processed at a cost of $9,000 and then sold for $35,000.Conviser should:

A)Further process product A because its incremental revenues will exceed incremental costs by $8,000.
B)Further process product A because its incremental revenues will exceed incremental costs by $26,000.
C)Sell as-is because the incremental loss is $2,000 if processed further.
D)Further process product A because its incremental revenues will exceed incremental costs by $16,000.

Question 46

The following are production and cost data for two products, A and B, produced in batches of 100 units. $\begin{array}{lrr}&\text { Product A }&\text { Product B }\\\text { Contribution margin per batch } & \$ 450 & \$ 340 \\\text { Machine set-ups needed per batch } & 25 & 20\end{array}$ The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product.What is the incremental profit from producing Product A instead of Product B for the year?

A)$216,000
B)$204,000
C)$12,000
D)$54,000

Question 47

The Book Rack has two locations, downtown and on campus.During March, the company reported net income of $164,000 and sales of $1.2 million.The contribution margin in the downtown store was $320,000 (32% of sales).The contribution margin in the campus store is $110,000.Direct fixed costs are $90,000 in the downtown store and $93,000 in the campus location.How much are total variable costs?

A)$953,000
B)$770,000
C)$680,000
D)$430,000

Question 48

Marshal Costumes owns two stores and management is considering eliminating the Mandarin store due to declining sales.Common fixed costs are allocated on the basis of sales.Contribution income statements are as follows: $\begin{array}{lrrr}&\text { Arlington }&\text {Mandarin}&\text { Total }\\\text { Sales } & \$ 300,000 & \$ 200,000 & \$ 500,000 \\\text { Variable costs } & 160,000 & 130,000 & 290,000 \\\text { Direct fixed costs } & 40,000 & 20,000 & 60,000 \\\text { Allocated fixed costs } & 80,000 & 65,000 & 145,000 \\\text { Net Income } & \$ 20,000 & \$(15,000) & \$ 5,000\end{array}$ Marshal's management feels that if they eliminate the Mandarin store, that sales in the Arlington store will increase by 10%.If the Mandarin store is closed, what is the incremental effect on profit for Marshal Costumes?

A)Increase by $17,000
B)Decrease by $36,000
C)Increase by $22,000
D)Decrease by $20,000

Question 49

Meehan Gifts manufactures a number of products from the same raw material.Joint processing costs total $4,000.Product Z could be sold at the cut-off point for $6,000 or it can be further processed at a cost of $9,000 and then sold for $14,000.Meehan Company should

A)sell product Z at the split-off point because its incremental costs will exceed incremental revenues by $5,000 than if processed further.
B)further process product Z because its incremental revenues will exceed incremental costs by $1,000 with this option.
C)sell product Z at the split-off point because its incremental costs will exceed incremental revenues by $1,000 than if processed further.
D)sell product Z at the split-off point because its incremental costs will exceed incremental revenues by $5,000 than if processed further.

Question 50

Trebecker Construction plans to discontinue its roofing segment which last year generated a contribution margin of $65,000 and incurred $70,000 in fixed costs.If the segment is discontinued, half of the fixed costs will be avoided.What effect is expected to occur to the company's overall profit?

A)A decrease of $5,000
B)A decrease of $30,000
C)A decrease of $5,000
D)An increase of $30,000

Question 51

Abacus has 800 obsolete calculators that are carried in inventory at a cost of $1,920.If these calculators are upgraded at a cost of $3,100, they could be sold for $4,500.Alternatively, the calculators could be sold "as is" for $1,600.What is the net advantage or disadvantage of reworking the calculators?

A)$1,400 advantage
B)$2,900 advantage
C)$5,440 disadvantage
D)$200 disadvantage

Question 52

The following are production and cost data for two products, buckets and pails, produced in batches of 600 each. $\begin{array}{lcr}& \text { Buckets } & \text { Pails } \\\text { Contribution margin per batch } & \$ 360 & \$ 250 \\\text { Machine set-ups needed per batch } &14 & 9\end{array}$ The company can only perform 9,450 set-ups each period, yet there is unlimited demand for each product.What is the maximum contribution margin for the year?

A)$366,000
B)$243,000
C)$1,050
D)$262,500

Question 53

Barnett Brass sells economy door knobs for $15 each.Unit product costs are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 3 \\\text { Direct labor } & 2 \\\text { Manufacturing overhead } & \underline { 4 } \\\text { Total } & \underline { \underline { \$ 9 } }\end{array}$$ An order to purchase 4,000 units was recently received from a new customer.There is enough capacity to fill the order and filling this order would not disrupt current operations.Barnett Brass would incur an additional $1.50 per unit for shipping costs.Thirty percent of the manufacturing overhead costs are fixed and would be incurred no matter how many units are produced.In negotiating a price, how much is the minimum acceptable selling price?

A)$10.50
B)$7.80
C)$9.30
D)$7.70

Question 54

Swell Computers has 12 obsolete computers that are carried in its inventory at a cost of $13,200.If these computers are upgraded at a cost of $7,500, they could be sold for $15,300.Alternatively, the computers could be sold "as is" for $9,000.What is the net advantage or disadvantage of upgrading the computers?

A)$6,300 advantage
B)$1,200 disadvantage
C)$5,400 disadvantage
D)$3,000 advantage

Question 55

Fanatic Footwear has two store locations, midtown and at the beach.During October, the company reported net income of $80,000 on sales of $450,000.Sales in the midtown store were $170,000 and variable costs in the beach store were 40% of sales.The contribution margin in the midtown store was $85,000.If total direct fixed costs are $40,000, how much are total fixed costs for Fanatic Footwear?

A)$93,000
B)$150,000
C)$370,000
D)None of these answer choices are correct.

Question 56

Which of the following statements regarding opportunity costs is true?

A)Opportunity costs are recorded as an expense since they are a cost of accepting another option.
B)Opportunity costs are always incremental.
C)Opportunity costs are unavoidable.
D)The same decision will be reached whether or not opportunity costs are considered in an incremental analysis.

Question 57

Speedo produces signature goggles which it sells for $35.The company produces 15,000 pairs of these goggles annually but has the capacity to produce 20,000.An order for manufacturing and selling 1,000 pairs at $25 has been received from the U.S.Olympic swim team that would not disrupt current operations.Current costs for the signature goggles are as follows: $\begin{array}{lr}\text { Direct materials } & \$ 6.00 \\\text { Direct labor } & 10.00 \\\text { Variable overhead } & 3.00 \\\text { Fixed overhead } & 8.00 \\\text { Total } & \$ 27.00\end{array}$ In addition, the Olympic coach would like to add the U.S.Olympic logo to each pair which would require an additional $2 per pair of goggles in additional labor costs.The company would also have to rent a logo stamper to stamp the logo which would cost $600.Which statement is true with regard to this order?

A)Incremental profit will be $4,000.
B)Incremental costs will be $27,000.
C)Incremental costs will be $21,600.
D)Incremental costs will exceed incremental revenues by $4,600.

Question 58

Publix has 2,700 pounds of bananas with a total cost of $864.Because the bananas have become too ripe, Publix is contemplating whether it should use the bananas to bake banana bread or sell the bananas 'as is' to the homeless center for $1,485.In addition to the cost of the bananas, it would cost $2,565 to convert the bananas into bread, which could then be sold for a total of $4,480.However, a special oven to bake the bread will have to be rented for an additional $300.What is the incremental effect on income if Publix converts the bananas to banana bread?

A)Increase of $130
B)Increase of $430
C)Decrease of $734
D)Increase of $1,615

Question 59

Tannimen Square has 800 obsolete calculators in its inventory which have a cost of $16 each.If the calculators are reworked they could be sold for $23 each.If sold 'as-is', the revenue would be only $12 each.If Tannimen decides to rework the calculators, how much should the company be willing to invest to ensure that no additional loss occurs on the sale of the calculators?

A)$5,600
B)$8,800
C)$0
D)$3,200

Question 60

Samson Designers produces a lady's handbag that normally sells for $120.The company produces 800 units annually but has the capacity to produce 1,100 units.An order from a customer has been received for 200 handbags at $85 each that would not disrupt current operations.Current costs for the handbag are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 23.00 \\\text { Direct labor } & 45.00 \\\text { Variable overhead } & 7.00 \\\text { Fixed overhead } & 12.00 \\\text { Total } & \$ 87.00\end{array}$$ In addition, the customer would like to add a monogram to each bag which would require an additional $4 per bag in additional labor costs.Samson would also have to purchase a piece of equipment to create the monogram which would cost $800.This equipment would not have any other uses.Which statement is true with regard to this situation?

A)Incremental revenues will exceed incremental costs by $400.
B)Incremental revenues will exceed incremental costs by $1,200.
C)Incremental costs will exceed incremental revenues by $1,200.
D)Incremental costs will exceed incremental revenues by $2,000.

Question 61

Foot Print has three product lines in its retail stores: shoes, boots, and sandals.The allocated fixed costs are based on units sold and are unavoidable.Results of June follow: $\begin{array}{lrrrr}& \text { Socks } & \text { Boots } & \text { Sandals } & \text { Total } \\ \text { Units sold } & 800 & 1,200 & 2,400 & 4,400 \\\hline \text { Revenue } & \$ 24,800 & \$ 30,400 & \$ 36,600 & \$ 91,800 \\\text { Variable costs } & 13,600 & 13,200 & 16,800 & 43,600 \\\text { Direct fixed costs } & 5,000 & 7,000 & 6,500 & 18,500 \\\text { Allocated fixed costs } & 8,000 & 9,000 & 8,000 & 25,000 \\\text { Net income (loss) } & \$(1,800) & \$ 1,200 & \$ 5,300 & \$ 4,700 \\\end{array}$ Demand of individual products is not affected by changes in other product lines.How much is the incremental effect on income of dropping socks?

A)Decrease of $11,200
B)Decrease of $6,200
C)Increase of $1,800
D)Decrease of $1,500

Question 62

Production of all the joint products should cease if

A)any of the individual joint products sells for less than its allocated cost.
B)the total joint cost is less than the total revenue generated when all of the joint products are sold.
C)any of the joint products have a negative gross margin after the joint costs have been allocated.
D)total revenue from the sale of all the joint products is less than the joint cost.

Question 63

The allocation of joint costs to joint products influences

A)the dollar amount of profit of each joint product.
B)the overall profitability of the company.
C)the decision to sell or process further the joint products.
D)the timing of when the split-off point will occur.

Question 64

What is the stage of production at which the individual joint products are identified?

A)Split-off point
B)Joint processing point
C)Joint identification point
D)Relative sales point

Question 65

Which statement is true of the relative sales value method if all joints products are sold at the split-off point?
I)The products will have the same gross margin ratio.
II)The products will have the same gross margin per unit.

A)Both I and II
B)Neither I nor II
C)Only I
D)Only II

Question 66

Which of the following is not a joint product?

A)Milk converted into cream and butter
B)Logs converted into paper and cardboard
C)Crude oil converted into gasoline and jet fuel
D)4' x 8' plywood converted into chairs and tables

Question 67

Way Living sells unfinished oak shelves for $35 each.Budgeted sales for the year are expected to be 4,000 shelves.Each shelf requires 4 linear feet of wood to produce.The cost of wood is $4.80 per linear foot.Direct labor is $6.00 per shelf.Variable overhead and fixed overhead costs per unfinished shelf are $1.00 and $0.50 respectively.Way Living is considering whether it should stain the shelves so it can sell them for $48.00 each.It estimates it will sell 60% of the budgeted shelves 'stained' with the others unfinished.The direct costs of staining each shelf are $9.00.How much is the incremental effect on profit if the company stains the shelves?

A)$16,000
B)$67,200
C)$52,000
D)None of these answer choices are correct.

Question 68

B&B Flooring produced 8,000 yards of its economy-grade carpet.In the coloring process, there was a pigment defect and the resulting color faded.The carpet normally sells for $18 per yard, with $6 of variable cost per yard and $3 of fixed cost per yard assigned to the carpet.The company realizes that it cannot sell the faded carpet for $18 per yard through its normal channels, unless the coloring process is repeated.The incremental cost of the coloring process is $4 per yard.Ace Apartments is willing to buy the carpet in its current faded condition for $13 per yard.Should B&B repeat the coloring process or sell the carpet to Ace Apartments?

A)Repeat coloring for $8,000 benefit
B)Sell 'as is' to Ace for $32,000 benefit
C)Repeat coloring for $56,000 benefit
D)Sell 'as is' to Ace for $56,000 benefit

Question 69

At the split-off point,

A)the production process stops and profitable products can be sold.
B)inventory becomes obsolete.
C)the company recognizes profit by selling the product.
D)the cost incurred can be separated into individual joint products.

Question 70

Which method of allocating joint costs is based on the proportional sales values at the split-off point?

A)Proportional method
B)Physical quantities method
C)Relative sales value method
D)Joint allocation method

Question 71

Two or more products that result from common inputs are called

A)split products.
B)joint products.
C)split-off products.
D)common products.

Question 72

Ralston Tile produces three types of ceramic tiles, models 33, 41, and 56 from clay, which is mined in the Arizona desert.Budgeted data for next month follows:

Question 73

Joint costs

A)are the cost of the common inputs for joint products.
B)are the costs incurred after the split-off point for joint products.
C)are expensed because they have no future benefit for a company.
D)only exist when there are no opportunity costs involved in the decision.

Question 74

Deep South Dairy gathered the following data about the two products that it produces: $\begin{array}{llrr}& \begin{array}{c}\text { Current Sales } \\\end{array} & \text { Estim ated Added } & \text { Sales Value if } \\\text { Product } &\text { Value }& \text { Processing Costs } & \text { Processed Further }\\\text { Milk } & \$ 8,000 & \$ 2,000 & \$ 11,000 \\\text { Yogurt } & 12,000 & 7,000 & 18,000\end{array}$ Which of the products should be processed further?

A)Milk, because profits increase by $1,000, whereas Yogurt results in decrease of profit
B)Yogurt, because profits increase by $1,000, which exceeds the profits increased by Milk
C)Both products, because revenue will increase by $9,000 for Milk, and by $6,000 for Yogurt
D)Both products, because profits for Milk will be $1,000, and profit for Yogurt will be $1,000

Question 75

Which of the following is a disadvantage of using an outside supplier?

A)Employees may have to be laid off if production is outsourced.
B)The supplier assumes the risk of obsolete inventory.
C)The supplier may provide a cost savings due to increased efficiencies.
D)The supplier may have better quality control.

Question 76

Which of the following costs are always incremental and relevant in decision analysis?

A)Opportunity costs and sunk costs
B)Sunk costs and avoidable costs
C)Unavoidable costs and opportunity costs
D)Relevant costs and opportunity costs

Question 77

Which of the following is a common input resulting in joint products?

A)Logwood that is made into shelves of different lengths
B)Uncooked pasta, which is made into cooked meals at a restaurant
C)Flour that is made into bread, cookies, and other baked goods
D)A hog that is made into ham, bacon, and other meat products

Question 78

One advantage of using an outside supplier is that

A)the adverse effect of a downturn in the business will be less severe.
B)it will enhance the manager's control over the production process.
C)the component produced will always be of a better quality.
D)it will boost employee morale.

Question 79

LanaTech produces three products, X, Y, and Z, from recycled paper.Budgeted data for next month follows: The joint cost of the recycled paper is $110,000.Which of the products should be produced beyond the split-off point?

Question 80

When making a decision to sell a joint product at the split-off point or process it further, which of the following is not relevant?

A)The amount of joint costs assigned
B)The sales value at the split-off point
C)The cost of further processing
D)The sales value after further processing