The salary or wage that you could be earning while you are taking this test is

a. an opportunity cost.
b. a sunk cost.
c. an incremental cost.
d. a joint cost.

The kind of cost that can be ignored in short-term decision making is

a. a differential cost.
b. an opportunity cost.
c. a relevant cost.
d. a sunk cost.

The role of sunk costs in decision making can be summed up in which of the following
sayings?
a. Nothing ventured, nothing gained.
b. Bygones are bygones.
c. A penny saved is a penny earned.

m
d. The love of money is the root of all evil.

er as
co
Allocated costs are

eH w
a. generally separable.

o.
b. generally variable.
c. generally common.
rs e
d. especially important in deciding whether to drop a segment.
ou urc
A product should be dropped if
a. it has a negative incremental profit.
o

b. it has a negative contribution margin.

aC s

c. dropping it will increase the total profit of the company.

vi y re

d. it is not essential to the company's product line.

From its refining process an oil company obtains three products, one of which can be processed
further into a different product, the other two of which can be sold after further refining. The
ed d

refining process is
ar stu

a. a joint process.
b. a mixed cost process.
c. an unavoidable process.
d. a process whose costs should be allocated to the resulting products.
is
Th

A major factor in evaluating a special order is

a. the expected contribution margin on the order.
b. the possible effects on sales at regular prices.
c. the availability of capacity to produce the additional units.
sh

d. all of the above.

This study source was downloaded by 100000806457685 from CourseHero.com on 09-18-2021 07:17:47 GMT -05:00

https://www.coursehero.com/file/70155123/STDM-Sample-Questionsdocx/
Which of the following is true for a make-or-buy decision?
a. The reliability of the outside supplier of the component is important to the decision.
b. Depreciation on equipment used in making the component and having no other use is the
critical factor in the decision.
c. Opportunity costs are irrelevant.
d. The company should make the component if the purchase price is less than the per-unit
variable cost to make the component.

Which of the following costs is relevant in deciding whether to sell joint products at split-off or
process them further?
a. The unavoidable costs of further processing.
b. The avoidable costs of further processing.
c. The variable cost of operating the joint process.
d. The cost of materials used to make the joint products.

A manufacturing process that invariably produces two or more products

m
a. is a complementary process.

er as
b. is a joint process.

co
c. normally has only fixed costs.

eH w
d. usually has primarily variable costs.

o.
rs e
Which of the following is a short-term decision in which opportunity costs are not relevant?
ou urc
a. Make-or-buy decision.
b. Special-order decision.
c. Drop-a-segment decision.
d. None of the above.
o
aC s

Which of the following is a true statement?

vi y re

a. Theory of Constraints is useful for identifying physical constraints but cannot incorporate
nonphysical constraints.
b. Theory of Constraints is useful in analyzing internal constraints but cannot identify
external constraints.
ed d

c. Constraints may be either internal or external.

ar stu

d. Internal constraints are physical while external constraints are imaginary.

A company has space that it uses to make a component. It could rent the space to another
company. The rent is
is

a. a sunk cost.
b. an opportunity cost.
Th

c. a joint cost.
d. an avoidable cost.

In a make-or-buy decision, which of the following is true?

sh

a. Variable costs are the only relevant costs.

b. Allocated fixed costs are relevant.
c. Alternative uses of space and machinery are relevant.
d. Making is the correct decision when there is idle capacity.

This study source was downloaded by 100000806457685 from CourseHero.com on 09-18-2021 07:17:47 GMT -05:00

https://www.coursehero.com/file/70155123/STDM-Sample-Questionsdocx/
The best characterization of an opportunity cost is that it is
a. relevant to decision making but is not usually reflected in accounting records.
b. not relevant to decision making and is not usually reflected in accounting records.
c. relevant to decision making and is usually reflected in accounting records.
d. not relevant to decision making and is usually reflected in accounting records.

A sunk cost is
a. not avoidable.
b. avoidable under one alternative but not under another.
c. joint or common.
d. direct to a segment.

Differential costs are costs that are

a. not avoidable.
b. avoidable under one alternative but not under another.
c. joint or common.

m
d. not direct to a segment.

er as
co
A common cost

eH w
a. relates to a process that produces more than one product.
b. should be allocated to the segments of a company.

o.
c. can usually be avoided in its entirety by dropping a segment.
d. none of the above. rs e
ou urc
An opportunity cost commonly associated with a special order is
a. the contribution margin on lost sales.
o

b. the variable costs of the order.

aC s

c. additional fixed costs related to the increased output.

vi y re

d. any of the above.

Which of the following statements pertaining to the Theory of Constraints is true?

a. Inventory is evil and should never be kept.
ed d

b. Inventory is important to keep immediately before a bottleneck process.

c. Inventory should be kept before every machining process to prevent any downtime.
ar stu

d. None of the above are true.

Which of the following cost-classification schemes is most relevant to decision making?

a. Fixed--variable.
is

b. Joint--common
Th

c. Avoidable--unavoidable.
d. Direct--common.

Which of the following is NOT relevant in deciding whether to process a joint product beyond its
sh

split-off point?
a. The split-off value.
b. The price after additional processing.
c. The cost of further processing.
d. The cost of operating the joint process.

This study source was downloaded by 100000806457685 from CourseHero.com on 09-18-2021 07:17:47 GMT -05:00

https://www.coursehero.com/file/70155123/STDM-Sample-Questionsdocx/
Which of the following is NOT a short-term decision?
a. Accept a special order.
b. Make-or-buy a component.
c. Replace a machine.
d. Sell a joint product at split-off or process it further.

The variable cost of a unit of product made yesterday is

a. an incremental cost.
b. an opportunity cost.
c. a differential cost.
d. a sunk cost.

The most profitable use of a resource that has limited capacity and is needed in the production
of more than one product is a function of which of the following?
a. The number of units of each product the company can sell.
b. The contribution margin of each product.

m
c. The amount of resource-use required for each unit of each product.

er as
d. All of the above.

co
eH w
Which of the following is NOT relevant in a make-or-buy decision about a part the entity uses in
some of its products?

o.
a. The reliability of the outside supplier.
rs e
b. The alternative uses of owned equipment used to make the part.
ou urc
c. The outside supplier's per-unit variable cost to make the part.
d. The number of units of the part needed each period.
o

Which of the following is NOT relevant to a decision about whether to drop a segment?
aC s

a. The contribution margin expected to be produced by the segment.

vi y re

b. The avoidable fixed costs direct to that segment.

c. The complementary effects of dropping the segment.
d. "None of the above" is the best answer because all of the above are relevant.
ed d

Just-in-time manufacturers are less likely than conventional manufacturing companies to

a. operate a joint process that results in joint products.
ar stu

b. be able to accommodate special orders.

c. have constraints on their productive capacity.
d. fit any of the above characterizations.
is

The total demand for Product Z is relevant to a decision about

Th

a. the best use of a resource that is in limited supply and is used in the production of
Product Z and one other of the company's products.
b. whether to sell Product Z, a joint product, at split-off or process it further into another
salable product.
sh

c. replacing Product Z with another product.

d. all of the above decisions.

This study source was downloaded by 100000806457685 from CourseHero.com on 09-18-2021 07:17:47 GMT -05:00

https://www.coursehero.com/file/70155123/STDM-Sample-Questionsdocx/
A cost is not relevant for decision making if it:
a. Does not differ for each option available to the decision maker.
b. Changes from period to period
c. Is a future cost.
d. Is a mixed cost.
e. Is a fixed cost.

Variable costs will generally be relevant for decision making because they:
a. Differ between decision options.
b. Are volume-based.
c. Have not been committed and are likely to differ between decision alternatives.
d. Differ between decision options and have been committed.
e. Measure opportunity cost.

Fixed costs will often be irrelevant for short-term decision making because they:
a. Do not vary on a per-unit-of-output basis.

m
b. Are the same each time period.

er as
c. Typically do not differ in total between decision alternatives being considered.

co
d. Are not committed.

eH w
e. Cannot be estimated with precision.

o.
A "special sales order" is:
a. Typically expected. rs e
ou urc
b. A profitable opportunity to sell a specified quantity of a firm's product or service.
c. A one-time opportunity to sell a specified quantity of a product or service
d. A particularly large customer order.
o

e. In most cases, a rush order.

aC s
vi y re

"Committed" and "Sunk" costs are:

a. Generally not fixed.
b. Generally small in amount.
c. The result of prior bad decisions
ed d

d. Not relevant for decision-making.

e. Recoverable in trade.
ar stu

All the following are characteristic of relevant costs except:

a. They are generally variable.
is

b. They are not committed.

c. They are different in amount for different options.
Th

d. They are costs that will be incurred in the future.

e. They are confined to inventory-related (i.e., product) costs.

The value-chain analysis used regarding the "make-or-buy decision" often leads a firm to make
sh

use of:
a. Activity-based costing (ABC).
b. Cost-volume profit (CVP) analysis.
c. Outsourcing options.
d. Relevant cost-based pricing.
e. Value stream accounting.

This study source was downloaded by 100000806457685 from CourseHero.com on 09-18-2021 07:17:47 GMT -05:00

https://www.coursehero.com/file/70155123/STDM-Sample-Questionsdocx/
m
er as
co
eH w
o.
rs e
ou urc
o
aC s
vi y re
ed d
ar stu
is
Th
sh

This study source was downloaded by 100000806457685 from CourseHero.com on 09-18-2021 07:17:47 GMT -05:00

https://www.coursehero.com/file/70155123/STDM-Sample-Questionsdocx/
Powered by TCPDF (www.tcpdf.org)