Question 1

Future costs that differ across alternatives describe
A) relevant costs.
B) target cost.
C) full costs.
D) activity-based costs.

Accepted Answer

Future costs that differ across alternatives are relevant costs because they are the costs that arise as a result of making a particular decision. These costs are important in the decision-making process as they help in determining the most suitable course of action. Relevant costs are those that vary between alternatives and do have an impact on decision making.

Question 2

The use of relevant cost data to identify the alternative that provides the greatest benefit to the organization describes
A) target cost analysis.
B) functional cost analysis.
C) activity cost analysis.
D) tactical cost analysis.

Accepted Answer

D

Question 3

Which of the following costs is NOT relevant to a special-order decision?
A) the direct labor costs to manufacture the special-order units
B) the variable manufacturing overhead incurred to manufacture the special-order units
C) the portion of the cost of leasing the factory that is allocated to the special order
D) all of these costs are relevant

Accepted Answer

The portion of the cost of leasing the factory that is allocated to the special order is not relevant as it is a fixed cost that cannot be avoided regardless of whether or not the special order is accepted. The direct labor costs and variable manufacturing overhead costs are relevant because they are directly tied to the production of the special-order units.

Question 4

Which of the following statement is true concerning the nature of tactical decisions?
A) Tactical decisions are often small-scale actions.
B) Tactical decisions often have an immediate or limited end in view.
C) Tactical decisions should support alternatives that result in long-term competitive advantage.
D) All of these statements are true.

Accepted Answer

Tactical decisions are typically small-scale, have immediate or short-term objectives, and should align with long-term strategic goals, making all the statements true.

Question 5

Tactical decision making relies
A) only on relevant cost information.
B) only on qualitative factors.
C) on relevant costs as well as other qualitative factors.
D) on neither relevant costs nor qualitative decisions.

Accepted Answer

Tactical decision making requires taking into account all relevant cost information as well as other qualitative factors such as market conditions, competitor behavior, and customer preferences. Ignoring either of these elements can result in flawed decision making.

Question 6

Which of the following costs is NOT relevant to a make-or-buy decision?
A) $10,000 of direct labor used to manufacture the parts
B) $30,000 of depreciation on the plant used to manufacture the parts
C) the supervisor's salary of $25,000 that will be avoided if the part is purchased from an outside supplier
D) $15,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier

Accepted Answer

Depreciation on the plant used to manufacture the parts is a sunk cost and therefore not relevant to the decision. The other costs listed are relevant and should be considered in a make-or-buy decision.

Question 7

Which of the following statements is TRUE when making a decision between two alternatives?
A) Variable costs may not be relevant when the decision alternatives have the same activity levels.
B) Variable costs are not relevant when the decision alternatives have different activity levels.
C) Sunk costs are always relevant.
D) Fixed costs are never relevant.

Accepted Answer

Variable costs may not be relevant when the decision alternatives have the same activity levels because they do not vary with changes in activity levels. However, if the activity levels vary between the alternatives, the variable costs should be considered in the decision-making process. Sunk costs, which are costs that have already been incurred and cannot be recovered, should not be considered in the decision-making process. Fixed costs should be considered in the decision-making process, especially if they differ between the alternatives.

Question 8

The Titanic hit an iceberg and sank.In deciding whether or not to salvage the ship, its book value is a(n)
A) relevant cost.
B) sunk cost.
C) opportunity cost.
D) discretionary cost.

Accepted Answer

The book value of the Titanic is a sunk cost because it is a cost that has already been incurred and cannot be recovered. It is not relevant to the decision of salvaging the ship as it cannot be changed or influenced by the decision.

Question 9

Relevant costs are
A) past costs.
B) future costs.
C) full costs.
D) cost drivers.

Accepted Answer

Relevant costs are future costs that are affected by a particular decision. Past costs (A) are not relevant as they cannot be changed, and full costs (C) are not necessarily relevant as not all costs are affected by a particular decision. Cost drivers (D) are the factors that affect the costs, but they are not costs themselves.

Question 10

Sunk costs are
A) future costs that have no benefit.
B) relevant costs that have only short-run benefits.
C) target costs.
D) always irrelevant.

Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, therefore they are always irrelevant for decision making moving forward.

Question 11

An important qualitative factor to consider regarding a special order is the
A) variable costs associated with the special order.
B) avoidable fixed costs associated with the special order.
C) effect the sale of special-order units will have on the sale of regularly priced units.
D) incremental revenue from the special order.

Accepted Answer

The effect the sale of special-order units will have on the sale of regularly priced units is an important qualitative factor to consider. If the sale of the special-order units will cannibalize sales of regularly priced units, then accepting the special order may not be beneficial in the long run.

Question 12

Which item is NOT an example of a sunk cost?
A) materials needed for production
B) purchase cost of machinery
C) depreciation
D) all are sunk costs

Accepted Answer

A sunk cost refers to a cost that has already been incurred and cannot be recovered regardless of any decisions made in the future. Materials needed for production are not a sunk cost because they can be sold or used for other purposes if the production project is abandoned. The purchase cost of machinery and depreciation are examples of sunk costs because they were incurred in the past and cannot be recovered. Therefore, the correct answer is A.

Question 13

The steps in the tactical decision making process are:  What is the proper sequence of steps?
A) I, II, V, III, IV
B) II, I, V, III, IV
C) V, II, III, I, IV
D) V, III, II, IV, I

Accepted Answer

The answer of The steps in the tactical decision making...

Question 14

______________ are future costs that differ across alternatives.
A) Relevant costs
B) Irrelevant costs
C) Sunk costs
D) Past costs

Accepted Answer

Relevant costs are future costs that differ across alternatives and are important in making decisions. Therefore, identifying relevant costs is crucial in making the best choice.

Question 15

Which of the following is NOT a step in the tactical decision-making process?
A) Compare full costs and benefits for alternatives.
B) Identify feasible alternatives.
C) Select the best alternative.
D) Recognize and define the problem.

Accepted Answer

Comparing full costs and benefits for alternatives is not typically a step in the tactical decision-making process because this process focuses on relevant costs and benefits—those that differ between alternatives—rather than full costs and benefits.

Question 16

Sound tactical decision making
A) only concerns the short run.
B) consists of large scale actions that serve a broad purpose.
C) consists of supporting the strategic objectives of the firm.
D) only concerns the long run.

Accepted Answer

Sound tactical decision making consists of supporting the strategic objectives of the firm, which means that it is focused on achieving long-term goals while also considering short-term actions. It is not limited to the short run or large-scale actions.

Question 17

Qualitative factors that should be considered when evaluating a make-or-buy decision are
A) the quality of the outside supplier's product.
B) whether the outside supplier can provide the needed quantities.
C) whether the outside supplier can provide the product when it is needed.
D) all of these.

Accepted Answer

The quality of the outside supplier's product, the ability to provide needed quantities, and the ability to provide the product when it is needed are all important qualitative factors to consider when making a decision between producing in-house or outsourcing to a supplier. Therefore, all options are correct.

Question 18

_______________ consists of choosing among alternatives with an immediate or limited end in view.
A) Long-run decision making
B) Tactical decision making
C) Universal decision making
D) All of these

Accepted Answer

Tactical decision making consists of choosing among alternatives with an immediate or limited end in view. Long-run decision making involves choosing among alternatives with a longer time horizon, while universal decision making involves making decisions that apply across a wide range of situations.

Question 19

A purchasing agent has two potential firms from which to buy materials for production.If both firms charge the same price, the material cost is a(n)
A) irrelevant cost.
B) relevant cost.
C) sunk cost.
D) opportunity cost.

Accepted Answer

Since both firms charge the same price for materials, the cost does not affect the decision-making process, making it an irrelevant cost.

Question 20

In order for costs or benefits to be relevant, what must be true?
A) All decisions must relate to future.
B) Identifying relevant costs and benefits is an easy process.
C) Relevancy will relate both to the future and the past.
D) All of these are true statements.

Accepted Answer

Relevant costs and benefits are those that relate to future decisions, not past decisions. Identifying relevant costs and benefits is often complex and requires careful analysis. Therefore, options B and C are incorrect.

Quiz 17: Activity Resource Usage Model and Tactical Decision Making

Future costs that differ across alternatives describe

The use of relevant cost data to identify the alternative that provides the greatest benefit to the organization describes

Which of the following costs is NOT relevant to a special-order decision?

Which of the following statement is true concerning the nature of tactical decisions?

Tactical decision making relies

Which of the following costs is NOT relevant to a make-or-buy decision?

Which of the following statements is TRUE when making a decision between two alternatives?

The Titanic hit an iceberg and sank.In deciding whether or not to salvage the ship, its book value is a(n)

Relevant costs are

Sunk costs are

An important qualitative factor to consider regarding a special order is the

Which item is NOT an example of a sunk cost?

The steps in the tactical decision making process are: What is the proper sequence of steps?

______________ are future costs that differ across alternatives.

Which of the following is NOT a step in the tactical decision-making process?

Sound tactical decision making

Qualitative factors that should be considered when evaluating a make-or-buy decision are

_______________ consists of choosing among alternatives with an immediate or limited end in view.

A purchasing agent has two potential firms from which to buy materials for production.If both firms charge the same price, the material cost is a(n)

In order for costs or benefits to be relevant, what must be true?