Question 1

In which step of the decision-making process do managers compare predicted benefits?
A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance,and Learn

Accepted Answer

Managers compare predicted benefits in Step 4: Make Decisions by Choosing Among Alternatives. In this step, managers consider the predictions made in the previous step and evaluate the potential benefits of each alternative in order to make a final decision.

Question 2

________ are outcomes that are difficult to measure accurately in numerical terms.
A)Quantitative factors
B)Qualitative factors
C)Decision situations
D)Long-run implications
E)Make-or-buy decisions

Accepted Answer

Qualitative factors are outcomes that are subjective and difficult to measure in numerical terms, such as customer satisfaction, brand image, and employee morale. This is in contrast to quantitative factors, which are objective and measurable, such as revenue, costs, and market share. Decision situations, long-run implications, and make-or-buy decisions are not directly related to the measurement of outcomes as qualitative or quantitative.

Question 3

The Future Manufacturing Company employed a new Operations Manager.The previous manager did not keep accurate records and the new manager does not have an accurate account of the departmental historical data in 2012 because the employees received a wage increase.The managerial accountant provided the new operations manager the following historical data:
  
The Executive Director asked the new manager how much the department would save if they considered a reorganization of the manufacturing operations.The specifically asked if a reduction in staff,from 25 full-time employees,to 20 full-time workers is cost effective because the new computer system can absorb the job duties of those 5 employees.The employees heard rumors about a potential layoff in the department and the employee morale is low.
Next,the new manager wants to predict the amount of manufacturing hours based on a reduction in staff.
  
Required:
Compute the historical cost data,the predicted cost data,and discuss the amount of savings to the department if they reorganize and eliminate 5 workers.Next,compute the new cost data if the manager provides each employee a 10% salary increase.Will an increase in salary increase employee morale? Why or why not?

Accepted Answer

The historical cost is $1,054,687.50 and the predicted cost is $843,750.The total savings is $210,937.50.The new manager can improve the employee morale if the employees receive a raise.The new predicted cost data after each employee receives a 10% raise is $928,125,with a new total savings of $126,562.50.Managerial Decision to enhance employee moral: This will vary depending on the student response.
Explanation: Historical data:
[($18.75 wage with salary increase × 2,250 total hours × 25 total employees)] = $1,054,687.50
Predicted data:
[($18.75 × 2,250 × 20)] = $843,750
Savings:
[($1,054,687.50 - $843,750)] = $210,937.50
New predicted data with a 10% salary increase.
[($18.75 × 2,250 × 20 × 10%)] = $84,375
[($84,375 + $843,750)] = $928,125
[($1,054,687.50 - $928,125)] = $126,562.50 new total savings with employee wage increase.
It would be nice to give the existing employees a raise since the new manager saves the department $210,937.50,and $126,562.50 total savings after new wage increase to enhance employee morale.

Question 4

Decision models include:
A)only high-low analysis.
B)only regression analysis.
C)only qualitative analysis.
D)only quantitative analysis.
E)quantitative and qualitative analysis.

Accepted Answer

Decision models can involve both quantitative and qualitative analysis methods. While quantitative analyses such as regression analysis and high-low analysis can provide important insights, qualitative methods such as brainstorming, SWOT analysis, and stakeholder analysis can also be valuable in informing decisions. Therefore, option E is the best choice.

Question 5

The manager at the Screen Saver Manufacturing manufactures screen savers.The manager continues to find ways to reduce manufacturing costs and the manager received a proposal from Entrepreneurial Consultants to rearrange the production in the upcoming year.The managerial accountant provided the following information:

Required
Compute the current and proposed information and decide whether management should accept the proposal.Which of the following decisions should management accept?
A)$138,000;Current
B)$120,400 Proposed
C)$118,000;Current
D)$124,000;Proposed
E)$180,000;Proposed

Accepted Answer

B)Current Operations: [(5 × 2,300 × $12)] = $138,000
Proposed Operations: [(4 × 2,150 × $14)] = $120,400
The proposed cost is less.The manager should rearrange the operations.$120,400

Question 6

Which of the following is not a quantitative factor?
A)Marketing costs.
B)Employee morale.
C)Cost of direct materials.
D)Percentage of on-time flight arrivals.
E)Reduction in new product-development time.

Accepted Answer

Employee morale is not a quantitative factor as it cannot be easily measured with numbers or mathematical calculations. The other options listed are all quantitative factors as they can be measured, tracked, and analyzed with numerical data.

Question 7

The sum of all costs in a particular business function of the value chain,are called ________.
A)sunk costs
B)employee morale
C)relevant revenues
D)business function costs
E)one-time-only special costs

Accepted Answer

The sum of all costs in a particular business function of the value chain is called business function costs. Sunk costs are costs that have already been incurred and cannot be recovered, employee morale is a subjective factor that affects the productivity of employees, relevant revenues are revenues that are directly related to a particular decision, and one-time-only special costs are costs that are unique and nonrecurring.

Question 8

Reorganization eliminates all manual handling of materials.

Accepted Answer

Reorganization involves the redesign of a system to improve efficiency and eliminate waste. One of the key principles of reorganization is to eliminate manual handling of materials, as this can lead to inefficiencies and errors.

Question 9

In which step of the decision-making process do managers reorganize operations to reduce costs?
A)Step 1: Modify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance,and Learn.

Accepted Answer

The answer of In which step of the decision-making process...

Question 10

Effective feedback might affect future predictions,the prediction used,the way choices are made,or the implementation of the decision.

Accepted Answer

Effective feedback can provide valuable information for decision making, which can improve future predictions, the prediction methods used, inform the way choices are made, and impact the implementation of decisions. This makes it a powerful tool for individuals and organizations to make more informed and effective decisions.

Question 11

In which step of the decision-making process are managers most likely to predict future manufacturing labor costs?
A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement Decision,Evaluate Performance,and Learn.

Accepted Answer

In Step 3, managers are required to make predictions about the future based on the information acquired in Step 2. Predicting future manufacturing labor costs falls under this step as it involves forecasting potential labor cost trends and analyzing their potential impact on the organization's financial stability.

Question 12

We define relevant revenues as ________.
A)sunk costs
B)theory of constraints
C)product-mix decisions
D)expected future revenues
E)past costs in decisions making

Accepted Answer

Relevant revenues refer to the expected future revenues that can be gained or forgone by making a particular decision. It is an important aspect of decision-making in businesses as it guides the decision-makers to choose options that can generate the most revenue. A is incorrect because sunk costs refer to costs that have already been incurred and cannot be recovered. B refers to a management philosophy that seeks to optimize business processes. C refers to the process of choosing which products to make or sell based on the expected profit margins. E refers to incorporating past costs into present decision making, which is not a relevant consideration in decision-making.

Question 13

In which step of the decision-making process do managers improve implementation when they implement employee training and offer better supervision to employees?
A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement Decision,Evaluate Performance,and Learn.

Accepted Answer

In Step 5, managers implement their decision and evaluate the performance of the implemented decision to ensure it is successful. By implementing employee training and better supervision, managers are improving the implementation of their decision and evaluating employee performance to ensure they are meeting the established goals.

Question 14

The managers at Aberdeen Factory attended a meeting to discuss an existing agenda topic,whether to reorganize its manufacturing labor costs,but they need to determine the historical hourly wage rate of the employees.The manager reported the following historical cost information in 2012:

Required:
Compute the total past (historical)manufacturing labor costs at the Aberdeen Factory.
A)$53,750
B)$750,260
C)$806,250
D)$854,285
E)$905,260

Accepted Answer

C)25 workers × 2,150 hours per worker per year × $15 per hour)] = $806,250

Question 15

A formal method of making a choice that might involve both quantitative and qualitative analysis is ________.
A)sunk costs
B)stockout costs
C)carrying costs
D)decision model
E)economic order

Accepted Answer

A decision model is a formal method of making a choice that involves analyzing different options based on both quantitative data (e.g., financial metrics) and qualitative factors (e.g., customer preferences, market trends). The model allows decision-makers to weigh the pros and cons of each option and select the option that offers the greatest potential benefit or the least amount of risk. This approach can help to minimize the impact of biases, emotions, and heuristics in decision-making, leading to more rational and informed choices.

Question 16

In which step of the decision-making process do managers eliminate workers and there is a negative effect on employee morale?
A)Step 1: Modify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance,and Learn.

Accepted Answer

The answer of In which step of the decision-making process...

Question 17

Relevant costs are ________.
A)past costs only
B)expected future costs
C)qualitative factors only
D)quantitative factors only
E)one-time-only costs

Accepted Answer

Relevant costs are future costs that differ among alternatives. They are important in decision making as they can impact the final outcome. Past costs are not relevant as they cannot be changed and do not impact future decisions. Qualitative factors are important, but they alone cannot be used to make decisions. Quantitative factors are important, but not all quantitative factors are relevant for decision making. One-time-only costs may or may not be relevant depending on how they impact future decisions.

Question 18

Management accountants analyze and present relevant data to guide managers' decisions.

Accepted Answer

Management accountants are responsible for analyzing and interpreting financial data to help managers make informed decisions. They also provide financial reports and forecasts to aid in planning and resource allocation. Therefore, the statement is true.

Question 19

Past costs are historical costs,and ________.
A)constraints only
B)make-or-buy decisions
C)product-mix costs only
D)irrelevant to decision making
E)expected future revenues only

Accepted Answer

Past costs are irrelevant to decision making as they cannot be changed or controlled. Decisions should be based on expected future costs and revenues.

Question 20

Why do managers use decision models?

Accepted Answer

The answer of Why do managers use decision models?...

Quiz 9: Decision Making and Relevant Information

In which step of the decision-making process do managers compare predicted benefits?

________ are outcomes that are difficult to measure accurately in numerical terms.

Decision models include:

Which of the following is not a quantitative factor?

The sum of all costs in a particular business function of the value chain,are called ________.

Reorganization eliminates all manual handling of materials.

In which step of the decision-making process do managers reorganize operations to reduce costs?

Effective feedback might affect future predictions,the prediction used,the way choices are made,or the implementation of the decision.

In which step of the decision-making process are managers most likely to predict future manufacturing labor costs?

We define relevant revenues as ________.

In which step of the decision-making process do managers improve implementation when they implement employee training and offer better supervision to employees?

A formal method of making a choice that might involve both quantitative and qualitative analysis is ________.

In which step of the decision-making process do managers eliminate workers and there is a negative effect on employee morale?

Relevant costs are ________.

Management accountants analyze and present relevant data to guide managers' decisions.

Past costs are historical costs,and ________.

Why do managers use decision models?