Question 1

When managers use the decision process to make decisions,which information is used to make predictions about the amount of expected sales for Product XYZ?
A) historical data from the accounting system only
B) data outside the accounting system only
C) data outside the organization only
D) A and B

Accepted Answer

Historical data from the accounting system can provide insights into past sales trends and identify patterns that may continue in the future. Data outside the accounting system, such as market research and industry reports, can provide information on factors that may impact sales, such as changes in consumer trends or competing products. By using both sources of information, managers can make more informed predictions about the amount of expected sales for Product XYZ.

Question 2

Relevant information is the historical costs and revenues that differ due to alternative courses of action.

Accepted Answer

Relevant information refers to future costs and revenues that will differ among alternatives. Historical costs are sunk costs and do not change with future decisions.

Question 3

In determining whether to purchase a labor-saving machine,extreme resistance to the machine by employees would be a(n)________.
A) relevant qualitative factor
B) relevant quantitative factor
C) irrelevant qualitative factor
D) irrelevant quantitative factor

Accepted Answer

Employee resistance to a labor-saving machine would be a qualitative factor to consider since it relates to people's attitudes and behaviors, which can significantly impact the purchase and implementation of the machine. It is relevant because the resistance may create further issues in the workplace and affect employee morale and productivity.

Question 4

In considering whether to produce a single product,the associated direct materials and direct labor costs would probably be ________.
A) relevant qualitative factors
B) relevant quantitative factors
C) irrelevant qualitative factors
D) irrelevant quantitative factors

Accepted Answer

Direct materials and direct labor costs are quantitative factors that directly impact the cost of production and therefore, are relevant in making decisions about whether to produce a single product or multiple products.

Question 5

Historical or past information can have an indirect bearing on a manager's decision because ________.
A) the past decision resulted in a favorable outcome
B) it can help predict the future
C) the past decision resulted in a bonus for the manager
D) the manager wants to repeat the past decisions made some of the time

Accepted Answer

Past information can help in predicting future outcomes and can be used as a reference point while making decisions. The other options are incorrect as they do not provide a significant reason for using historical information in decision-making.

Question 6

A manager is trying to decide which product to emphasize in promotion and advertising efforts.Following the decision process used by managers,predictions about the amounts of future sales of the two products are used as input to the ________.
A) prediction model
B) prediction method
C) decision model
D) evaluation model

Accepted Answer

The decision model is used by managers to make a decision on which product to emphasize in promotion and advertising efforts. The model takes predictions about the amounts of future sales of the two products as input and provides a basis for making a decision. Prediction models and methods are used to generate the input data for the decision model, while evaluation models are used to measure the effectiveness of the decision after it has been implemented.

Question 7

Cantrall Company is trying to decide which product to manufacture.Expected direct materials costs are $4.00 per unit for each product.The expected direct labor costs are $2.00 per unit for one product and $4.00 per unit for another product.In choosing between the two products,the direct materials costs are ________ and the direct labor costs are ________.
A) relevant; irrelevant
B) irrelevant; relevant
C) relevant; relevant
D) irrelevant; irrelevant

Accepted Answer

Since the direct materials costs are the same for both products ($4.00 per unit), they do not affect the decision and are therefore irrelevant. However, the direct labor costs differ between the two products ($2.00 per unit for one product and $4.00 per unit for another), making them relevant to the decision-making process.

Question 8

When managers use the decision process to make decisions,what is the output after using the prediction method?
A) decision
B) implementation
C) predictions
D) evaluation

Accepted Answer

The output of using the prediction method in the decision process is "predictions." This method involves forecasting future outcomes based on current or past data, which helps in making informed decisions.

Question 9

Information is relevant in business decisions if it is a(n)________.
A) expected future revenue or it differs among alternatives
B) expected future revenue and it differs among alternatives
C) past revenue and it differs among alternatives
D) expected future revenue that differs from past revenue

Accepted Answer

Relevant information for business decisions must meet both criteria - it should pertain to expected future outcomes and it should differ among the alternatives being considered. Option A only addresses one of these criteria, while options C and D are incorrect as they focus on past revenue or a comparison between past and expected revenue. Option B correctly captures both criteria, making it the best choice.

Question 10

What are the qualitative aspects of a decision?
A) those which are not relevant to a decision
B) those with a concrete dollar amount
C) those for which measurement in dollars and cents is difficult and imprecise
D) those which are always relevant to a decision

Accepted Answer

Qualitative aspects of a decision are those factors that cannot be measured in terms of dollars and cents. These may include subjective factors such as reputation, brand image, customer satisfaction, employee morale, etc. While they may not have a direct financial impact, they can have a significant influence on the success of a business or organization.

Question 11

In decision making situations,________ aspects may dominate quantitative aspects in many decisions.
A) relevant
B) precision
C) accuracy
D) qualitative

Accepted Answer

Qualitative aspects such as values, emotions, and beliefs may play a significant role in decision making. For example, when deciding on a career path or a life partner, personal values and aspirations may be more important than quantitative factors such as salary or physical attractiveness.

Question 12

Historical data may have a direct bearing on a decision made today.

Accepted Answer

The answer of Historical data may have a direct bearing...

Question 13

When managers make decisions,the accountant's primary role is ________.
A) making the decision
B) providing information that may be useful to the manager
C) uncertain because it depends on the decision being made
D) uncertain because it depends on the manager

Accepted Answer

The accountant's primary role when managers make decisions is to provide information that may be useful to the manager. This includes financial data, analysis, and recommendations. While the accountant may contribute to the decision-making process, it is ultimately the manager's responsibility to make the decision.

Question 14

If perfectly accurate and relevant information is not available for decision making,the accountant should consider using information that is ________.
A) precise but irrelevant
B) imprecise but irrelevant
C) imprecise but relevant
D) imprecise but timely

Accepted Answer

Precise information may not always be available or necessary for decision making. However, relevance is critical in ensuring that the available information is significant to the decision at hand. Therefore, it is essential to take into account any imprecise but relevant information that can aid in the decision-making process.

Question 15

Historical or past information has no ________ bearing on a decision made by management.Historical or past information can have a(n)________ bearing on a decision made by management.
A) indirect; direct
B) direct; indirect
C) measurable; material
D) material; significant

Accepted Answer

Historical information typically has an indirect bearing as it provides context or trends, while current or future-focused information has a direct impact on decision-making.

Question 16

Which of the following statements is FALSE about information used for decision making?
A) Precise but irrelevant information is worthless for decision making.
B) Imprecise but relevant information can be useful for decision making.
C) Relevant information must be reasonably accurate but not precisely so.
D) Relevant information must be totally accurate or it is useless.

Accepted Answer

Relevant information does not always have to be totally accurate. Decision making involves weighing the available information and making the best decision based on the circumstances. Perfectly accurate information is often impossible to obtain, so decision makers can make use of information that is reasonably accurate but may have some degree of imprecision.

Question 17

When managers make decisions,the decision process used has the following steps in the order of occurrence:
A) Historical and Other Information, Prediction Model, Prediction, Decision Model, Decision, Implementation, Feedback
B) Historical and Other Information, Decision Model, Prediction Method, Implementation, Decision, Feedback
C) Historical and Other Information, Decision Model, Prediction Method, Decision, Implementation, Feedback
D) Historical and Other Information, Prediction Method, Prediction, Decision Model, Decision, Implementation, Feedback

Accepted Answer

The correct order involves gathering historical and other information, using a prediction method to make predictions, applying a decision model, making a decision, implementing it, and then gathering feedback.

Question 18

A company is trying to decide which product to manufacture.The following information is available:
$\begin{array}{lll}\text { Costs }&\text { Product A }&\text { Product B }\
\text { Direct Materials 1 } & \$ 2.00 \text { per unit } & \$ 2.20 \text { per unit } \
\text { Direct Materials 2 } & \$ 1.25 \text { per unit } & \$ 1.50 \text { per unit } \
\text { Direct Materials 3 } & \$ 0.50 \text { per unit } & \$ 0.80 \text { per unit } \
\text { Direct Labor } & \$ 0.70 \text { per unit } & \$ 0.70 \text { per unit }
\end{array}$
Which product cost is irrelevant to the decision?
A) Direct Materials 1
B) Direct Materials 2
C) Direct Materials 3
D) Direct Labor

Accepted Answer

Direct Labor cost is irrelevant to the decision because it is the same for both Product A and Product B, making it a non-differential cost in the decision-making process.

Question 19

Relevant information refers to ________ that will differ among the alternative courses of action.
A) future costs only
B) future revenues only
C) past costs and revenues
D) future costs and revenues

Accepted Answer

Relevant information refers to future costs and revenues that will differ among the alternative courses of action. Past costs and revenues are not relevant because they cannot be changed by the decision being considered. Similarly, considering only future costs or only future revenues may not give a complete picture of the consequences of each alternative. Therefore, the best choice is to consider both future costs and future revenues when evaluating alternative courses of action.

Question 20

When managers make decisions,the accountant is seen as the technical expert on financial analysis.

Accepted Answer

This statement is true. Accountants are often seen as the technical experts on financial analysis, and therefore can provide important insights and recommendations to managers when making decisions.

Quiz 5: Relevant Information for Decision Making With a Focus on Pricing Decisions

When managers use the decision process to make decisions,which information is used to make predictions about the amount of expected sales for Product XYZ?

Relevant information is the historical costs and revenues that differ due to alternative courses of action.

In determining whether to purchase a labor-saving machine,extreme resistance to the machine by employees would be a(n) ________.

In considering whether to produce a single product,the associated direct materials and direct labor costs would probably be ________.

Historical or past information can have an indirect bearing on a manager's decision because ________.

A manager is trying to decide which product to emphasize in promotion and advertising efforts.Following the decision process used by managers,predictions about the amounts of future sales of the two products are used as input to the ________.

When managers use the decision process to make decisions,what is the output after using the prediction method?

Information is relevant in business decisions if it is a(n) ________.

What are the qualitative aspects of a decision?

In decision making situations,________ aspects may dominate quantitative aspects in many decisions.

Historical data may have a direct bearing on a decision made today.

When managers make decisions,the accountant's primary role is ________.

If perfectly accurate and relevant information is not available for decision making,the accountant should consider using information that is ________.

Historical or past information has no bearing on a decision made by management.Historical or past information can have a(n) bearing on a decision made by management.

Which of the following statements is FALSE about information used for decision making?

When managers make decisions,the decision process used has the following steps in the order of occurrence:

Relevant information refers to ________ that will differ among the alternative courses of action.

When managers make decisions,the accountant is seen as the technical expert on financial analysis.

Quiz 5: Relevant Information for Decision Making With a Focus on Pricing Decisions

When managers use the decision process to make decisions,which information is used to make predictions about the amount of expected sales for Product XYZ?

Relevant information is the historical costs and revenues that differ due to alternative courses of action.

In determining whether to purchase a labor-saving machine,extreme resistance to the machine by employees would be a(n) ________.

In considering whether to produce a single product,the associated direct materials and direct labor costs would probably be ________.

Historical or past information can have an indirect bearing on a manager's decision because ________.

A manager is trying to decide which product to emphasize in promotion and advertising efforts.Following the decision process used by managers,predictions about the amounts of future sales of the two products are used as input to the ________.

When managers use the decision process to make decisions,what is the output after using the prediction method?

Information is relevant in business decisions if it is a(n) ________.

What are the qualitative aspects of a decision?

In decision making situations,________ aspects may dominate quantitative aspects in many decisions.

Historical data may have a direct bearing on a decision made today.

When managers make decisions,the accountant's primary role is ________.

If perfectly accurate and relevant information is not available for decision making,the accountant should consider using information that is ________.

Historical or past information has no ________ bearing on a decision made by management.Historical or past information can have a(n) ________ bearing on a decision made by management.

Which of the following statements is FALSE about information used for decision making?

When managers make decisions,the decision process used has the following steps in the order of occurrence:

Relevant information refers to ________ that will differ among the alternative courses of action.

When managers make decisions,the accountant is seen as the technical expert on financial analysis.

Historical or past information has no bearing on a decision made by management.Historical or past information can have a(n) bearing on a decision made by management.