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Scott, MIT Graduate
Category: Homework
Satisfied Customers: 3040
Experience:  MIT Graduate (Math, Programming, Science, and Music)
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1. The cost of a computer system installed last year is an

Customer Question

1. The cost of a computer system installed last year is an example of: (Points: 2)
        a sunk cost
        a relevant cost
        a differential cost
        an avoidable cost

2. In evaluating different alternatives, it is useful to concentrate on: (Points: 2)
        variable costs
        fixed costs
        total costs
        relevant costs

3. Relevant costs in a make-or-buy decision of a part include: (Points: 2)
        setup overhead costs for the manufacture of the product using the outsourced part
        currently used manufacturing capacity that has alternative uses when part is outsourced
        annual plant insurance costs that will remain the same
        corporate office costs that will be allocated differently

4. When there is excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price when: (Points: 2)
        incremental revenues exceed incremental costs
        additional fixed costs must be incurred to accommodate the order
        the company placing the order is in the same market segment as your current customers
        None of the above is correct.

5. When deciding whether to discontinue a segment of a business, managers should focus on: (Points: 2)
        equipment used by the segment that could become idle
        reallocation of corporate costs
        how total costs differ among alternatives
        operating income per unit of the discontinued segment

6. Costs are relevant to a particular decision if they: (Points: 2)
        are variable costs
        are fixed costs
        differ across, the decision alternatives being considered
        remain unchanged across the alternatives being considered

7. The following information applies to Questions 7 and 8.
Jim’s 5-year-old Geo Prizm requires repairs estimated at $3,000 to make it roadworthy again. His friend, Julie, suggested that he should buy a 5-year-old used Honda Civic instead for $3,000 cash. Julie estimated the following costs for the two cars:

     Geo Prizm     Honda Civic
Acquisition cost     $15,000     $3,000
Repairs     $ 3,000     ---
Annual operating costs
(Gas, maintenance, insurance)     $ 2,280     $2,100

The cost(s) NOT relevant for this decision is(are): (Points: 2)
        the acquisition cost of the Geo Prizm
        the acquisition cost of the Honda Civic
        the repairs to the Geo Prizm
        the annual operating costs of the Honda Civic

8. What should Jim do? What are his savings in the first year? (Points: 2)
        Buy the Honda Civic; $9,780
        Fix the Geo Prizm; $5,518
        Buy the Honda Civic; $180
        Fix the Geo Prizm; $5,280

9. Employee morale at Dos Santos, Inc., is very high. This type of information is known as: (Points: 2)
        a qualitative factor
        a quantitative factor
        a differential factor
        an opportunity cost

10. Which of following are risks of outsourcing the production of a part? (Points: 2)
        poor quality
        late delivery
        unscheduled price increases
        All of the above are risks of outsourcing.

11. Characteristics of a process layout include: (Points: 2)
        continuous processing
        long production paths
        small amounts of inventory
        no work-in-process storage areas

12. Characteristics of a product layout include: (Points: 2)
        raw materials and purchased parts are delivered directly to the production line where they are needed
        low-volume production
        a U-shaped layout
        small batches of unique products

13. The theory of constraints: (Points: 2)
        emphasizes long-term optimization
        maintains that carefully managing production bottlenecks will increase operating income
        helps managers make special one-time decisions
        suggests that some component parts should be outsourced

The following information applies to Questions 14 and 15.

Skate Magic manufactures three different product lines, Model TS, Model AY, and Model GG. Considerable market demand exists for all models. The following per unit data apply:
     Model TS     Model AY     Model GG
Selling price     $100     $120     $140
Direct materials     12     12     12
Direct labor ($12 per hour)     24     24     48
Variable support costs ($4 per machine-hour)     8     16     16
Fixed support costs     20     20     20

Which model has the greatest contribution margin per unit? (Points: 2)
        Model TS
        Model AY
        Model GG
        both Models TS and AY

15. Which model has the greatest contribution margin per machine-hour? (Points: 2)
        Model TS
        Model AY
        Model GG
        both Models YA and GG

16. If there is excess capacity, which model is the most profitable to produce? (Points: 2)
        Model TS
        Model AY
        Model GG
        both Models TS and AY

17. High levels of inventory result in all EXCEPT: (Points: 2)
        high moving, handling, and storage costs
        increased product obsolescence and damage
        increased financing costs
        idle facilities

18. Characteristics of just-in-time manufacturing include all of the following except: (Points: 2)
        the ability to process items in large batches
        making a product only when the customer requires it
        no work-in-process inventories
        a problem anywhere can stop production

19. Inspection costs of purchased parts and materials are examples of: (Points: 2)
        Prevention costs
        Appraisal costs
        Internal failure costs
        External failure costs

20. Warranty costs are an example of: (Points: 2)
        prevention costs
        appraisal costs
        internal failure costs
        external failure costs

Submitted: 8 years ago.
Category: Homework
Expert:  tutormba replied 8 years ago.
1) a- Sunk cost
2) d- Relevent cost
3) b
4) a
5) d
6) c
7) a
8) C - Buy the Honda Civic; $180
In Honda option there is cost saving. Geo ($3,000 + $2,280) – Honda ($3,000 +

$2,100) = $180

9) Differential factor
10) d

17) d
18) a
19) b
20) d

Working on rest of the qs. I have answered in Info request as I have not ;provided complete ans yet.
Customer: replied 8 years ago.
thank you I appreciate your effort but I did note that I would need response by 5:30 on yesterday.It's indicated on the assignment.I have already submitted the request ysterday.