ACC 560 Week 6 Quiz – Strayer NEW
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Week 6 Quiz 5:
Chapters 7 and 8
Chapter 7
TRUE-FALSE STATEMENTS
1. An important step in management's decision-making process is to
determine and evaluate possible courses of action.
Ans:, LO: 1, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Strategic Planning
2. In making decisions, management ordinarily considers both
financial and nonfinancial information.
Ans:, LO: 2, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Strategic Planning
3. In incremental analysis, total variable costs will always change
under alternative courses of action, and total fixed costs will always remain
constant.
Ans:, LO: 2, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: Strategic/Critical
Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Quantitative
Methods
4. Accountants are mainly involved in developing nonfinancial
information for management's consideration in choosing among alternatives.
Ans:, LO: 2, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective,
AICPA FN: Decision Modeling, AICPA PC: Interaction, IMA: Decision Analysis
5. Decision-making involves choosing among alternative courses of
action.
Ans:, LO: 2, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
6. Financial data are developed for a course of action under an
incremental basis and then it is compared to data developed under a
differential basis before a decision is made.
Ans:, LO: 2, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
7. In incremental analysis, total fixed costs will always remain
constant under alternative courses of action.
Ans:, LO: 2, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Decision Analysis
8. A special one-time order should never be accepted if the unit
sales price is less than the unit variable cost.
Ans:, LO: 3, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
9. If a company has excess capacity and present markets will not be
affected, it would be profitable to accept an order at a special unit price
even though the price is less than the unit variable cost to manufacture the
item.
Ans:, LO: 3, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
10. A company should never accept
an order for its product at less than its regular sales price.
Ans:, LO: 3, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
11. If a company is operating at less than capacity, the incremental
costs of a special order will likely include variable manufacturing costs, but
not fixed costs.
Ans:, LO: 3, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
12. An incremental make-or-buy decision depends solely on which
alternative is the lowest cost alternative.
Ans:, LO: 4, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
13. A decision whether to continue to make a product or buy it
externally depends on the external price and the amount of variable and fixed
costs that can be eliminated assuming no alternative uses of resources.
Ans:, LO: 4, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Quantitative
Methods
14. An opportunity cost is the potential benefit obtained by using
resources in an alternative course of action.
Ans:, LO: 4, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
15. If an incremental make or buy analysis indicates that it is
cheaper to buy rather than make an item, management should always make the
decision to choose the lowest cost alternative.
Ans:, LO: 4, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
16. In a sell or process further decision, management should process
further as long as the incremental revenues from additional processing exceed
the incremental variable costs.
Ans:, LO: 5, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
17. It is always better to sell now rather than process further
because of the time value of money.
Ans:, LO: 5, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
18. The basic decision rule in a sell or process further decision
is: process further if the incremental revenue from processing exceeds the
incremental processing costs.
Ans:, LO: 5, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
19. In a decision concerning replacing old equipment with new
equipment, the book value of the old equipment can be considered an opportunity
cost.
Ans:, LO: 6, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
20. In a decision concerning replacing old equipment with new
equipment, the book value of the old equipment can be considered a sunk cost.
Ans:, LO: 6, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
21. In a decision to retain or replace old equipment, the salvage
value of the old equipment is relevant in incremental analysis.
Ans:, LO: 6, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
22. It is better not to replace old equipment if it is not fully
depreciated.
Ans:, LO: 6, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
23. From a quantitative standpoint, a segment should be eliminated
if its contribution margin is less than the fixed costs that can be eliminated.
Ans:, LO: 7, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
24. The elimination of an unprofitable product line may adversely
affect the remaining product lines.
Ans:, LO: 7, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics
25. Many of the decisions involving incremental analysis have
qualitative features, but since they are not easily measured they should be
ignored.
Ans:, LO: 7, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics
26. Accounting
contributes to management's decision-making process through internal reports
that review the actual impact of the decision.
Ans:, LO: 1, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
27. The
process used to identify the financial data that change under alternative
courses of action is called allocation of limited resources.
Ans:, LO: 2, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN:
Risk Analysis, AICPA PC: Problem Solving, IMA: Decision Analysis
28. If
a company is operating at full capacity, the incremental costs of a special
order will likely include fixed manufacturing costs.
Ans:, LO: 3, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN:
Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics
29. The
basic decision rule in a sell or process further decision is: sell without further processing as long as
the incremental revenue from processing exceeds the incremental processing
costs.
Ans:, LO: 5, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
30. In
deciding on the future status of an unprofitable segment, management should
recognize that net income could decrease by eliminating the unprofitable
segment.
Ans:, LO: 7, Bloom: C,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN:
Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
MULTIPLE
CHOICE QUESTIONS
31. A major accounting contribution to the managerial
decision-making process in evaluating possible courses of action is to
a. assign responsibility for the decision.
b. provide relevant revenue and cost data about
each course of action.
c. determine the amount of money that should be
spent on a project.
d. decide which actions that management should
consider.
Ans:, LO: 1, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
32. Which of the following stages of the
management decision-making process is improperly sequenced?
a. Evaluate possible courses of action Make
decision.
b. Assign responsibility for the decision
Identify the problem.
c. Identify the problem Determine possible
courses of action.
d. Assign responsibility for decision
Determine possible courses of action.
Ans:, LO: 1, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
33. Internal reports that review the actual
impact of decisions are prepared by
a. department heads.
b. the controller.
c. management accountants.
d. factory workers.
Ans: LO: 1, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective,
AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Performance Measurement
34. Which of the following steps in the
management decision-making process does not
generally involve the managerial accountant?
a. Determine possible courses of action
b. Make the appropriate decision based on
relevant data
c. Prepare internal reports that review the
impact of decisions
d. None of these
Ans:, LO: 1, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective,
AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
35. Which is the first step in the
management decision-making process?
a. Determine and evaluate possible courses of
action.
b. Review results of the decision.
c. Identify the problem and assign
responsibility.
d. Make a decision.
Ans: LO: 1, Bloom: K, Difficulty:
Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN:
Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
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