Question 1

Which of the following costs always differs among future alternatives?

Accepted Answer

Relevant costs are those costs which differ among future alternatives and are considered as potential costs for making decisions. Historical costs, fixed costs, and variable costs may or may not differ among future alternatives and therefore cannot always be considered as relevant costs.

Question 2

Good managers use a five-step guide to making decisions.

Accepted Answer

Good managers typically use a five-step guide to making decisions, which includes identifying the problem, gathering information, considering alternatives, making a decision, and evaluating the outcome.

Question 3

When using the five-step decision process,which one of the following steps should be done first?

Accepted Answer

Obtaining information should be the first step in the decision-making process as it allows for gathering relevant facts and data necessary in choosing alternatives and making informed decisions.

Question 4

Answer the following questions using the information below:
Bright Lights Company manufactures small flashlights and is considering raising the price by 50 cents a unit for the coming year.With a 50-cent price increase,demand is expected to fall by 3000 units.
 $$\begin{array} { l r r } 
& \text { Currently } & \text { Projected } \
\text { Demand } & 20000 \text { units } & 18000 \text { units } \
\text { Selling price } & \$ 4.50 & \$ 5.00 \
\text { Incremental cost per unit } & \$ 3.00 & \$ 3.00
\end{array}$$
-If the price increase is implemented,operating profit is projected to:

Accepted Answer

The answer of Answer the following questions using the information...

Question 5

Answer the following questions using the information below:
Bright Lights Company manufactures small flashlights and is considering raising the price by 50 cents a unit for the coming year.With a 50-cent price increase,demand is expected to fall by 3000 units.
 $$\begin{array} { l r r } 
& \text { Currently } & \text { Projected } \
\text { Demand } & 20000 \text { units } & 18000 \text { units } \
\text { Selling price } & \$ 4.50 & \$ 5.00 \
\text { Incremental cost per unit } & \$ 3.00 & \$ 3.00
\end{array}$$
-Would you recommend the 50-cent price increase?

Accepted Answer

The operating profit before the price increase is calculated as (Selling Price - Incremental Cost) * Demand = ($4.50 - $3.00) * 20,000 = $30,000. After the price increase, the operating profit is ($5.00 - $3.00) * 18,000 = $36,000. Thus, operating profits increase with the price increase, making it a recommended action.

Question 6

________ costs are expected future costs and relevant revenues are expected future revenues that differ between the optional courses of action being considered.

Accepted Answer

Relevant costs are the expected future costs that differ between the alternatives and will impact the decision-making process. This is important when deciding which course of action to take, as the costs that are not relevant will not impact the decision-making process. Quantitative, qualitative, and financial factors may also be considered, but only if they are relevant to the decision being made.

Question 7

A decision model is a formal method for making a choice,frequently involving both quantitative and qualitative analyses.

Accepted Answer

A decision model is designed to incorporate both quantitative and qualitative factors in order to help individuals weigh the pros and cons of different options and make informed decisions.

Question 8

Relevant-cost analysis generally emphasises ________ factors that can be expressed in financial terms.

Accepted Answer

Relevant-cost analysis focuses on factors that can be quantified in financial terms, such as variable costs, fixed costs, and opportunity costs. Qualitative, strategic, and operational factors may also be considered, but they are typically not the primary focus.

Question 9

The textbook discusses a five-step decision process.Briefly explain each of the five steps.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of The textbook discusses a five-step decision process.Briefly...

Question 10

What could feedback regarding previous actions affect?

Accepted Answer

Feedback regarding previous actions can affect the decision model by providing new information or insights that might change the way decisions are made. It can also impact the implementation of decisions by highlighting areas that need improvement or adjustment. Additionally, feedback can influence future predictions by helping decision-makers understand what worked well and what didn't in the past, allowing for more accurate forecasting of potential outcomes. Therefore, all of these answers are correct.

Question 11

Management accountants work with managers by analysing and presenting relevant data to guide decisions.

Accepted Answer

This statement accurately describes the role of management accountants. They use accounting and financial data to provide insights and recommendations to help managers make informed decisions.

Question 12

Which of the following does a decision model involve?

Accepted Answer

A decision model involves both quantitative and qualitative analyses. While data and mathematical modeling are essential in decision-making, subjective factors such as experience, intuition, and individual's values and attitudes also play a significant role in the final decision. Therefore, a combination of both quantitative and qualitative analyses is necessary to make informed decisions. The decision model considers all essential criteria and dimensions of the problem, takes all relevant factors into account, and balances objectivity and subjectivity to evaluate the available alternatives and make optimal decisions.

Question 13

Sunk costs:

Accepted Answer

Sunk costs refer to costs that have already been incurred and cannot be recovered. Therefore, they should be ignored when evaluating alternatives because they have no impact on future costs or benefits. Only future costs and benefits are relevant in making decisions.

Question 14

________ factors are outcomes that are difficult to measure accurately in numerical terms.

Accepted Answer

Qualitative factors refer to subjective and intangible factors that cannot be measured explicitly. Examples of qualitative factors include customer satisfaction, brand reputation, and employee motivation. These factors are important to consider in decision making, but they are challenging to quantify.

Question 15

For decision making,a listing of the relevant costs:

Accepted Answer

A listing of the relevant costs should only include costs that differ among alternatives and future costs that can influence the decision. This helps the decision maker concentrate on the pertinent data that will aid in making the best choice. Therefore, all the options mentioned in the question are correct.

Question 16

When using the five-step decision process,which one of the following steps should be done last?

Accepted Answer

Evaluation and feedback is the last step in the five-step decision process, following the implementation of the decision to assess its effectiveness and outcomes.

Question 17

Just because qualitative factors and quantitative non-financial factors cannot be measured easily in financial terms does not make them:

Accepted Answer

Qualitative and quantitative non-financial factors can still be relevant and noteworthy even if they are not easily measured in financial terms, but this does not inherently make them unimportant.

Question 18

Ruggles Circuit Company manufactures circuit boards for other firms.Management is attempting to search for ways to reduce manufacturing labour costs and has received a proposal from a consulting company to rearrange the production floor next year.Using the information below regarding current operations and the new proposal,which of the following decisions should management accept?
$$\begin{array} { l r r } 
& \text { Currently } & \text { Proposed } \
\text { Required machine operators } & 5 & 4.5 \
\text { Materials-handling workers } & 1.25 & 1.25 \
\text { Employee average pay } & \$ 8 \text { per hour } & \$ 9 \text { per hour } \
\text { Hours worked per employee } & 2000 & 2000
\end{array}$$

Accepted Answer

The answer of Ruggles Circuit Company manufactures circuit boards for...

Question 19

Place the following steps from the five-step decision process in order:
A = Make predictions about future costs
B = Evaluate performance to provide feedback
C = Implement the decision
D = Choose an alternative

Accepted Answer

The correct order is: C, D, A, B

Question 20

What is the formal process of choosing between alternatives known as?

Accepted Answer

The formal process of choosing between alternatives is known as a decision model. A decision model is a systematic and structured approach to making decisions that involves identifying and evaluating alternatives based on specific criteria and selecting the one that best meets the decision maker's objectives.

Quiz 10: Decision Making and Relevant Information

Which of the following costs always differs among future alternatives?

Good managers use a five-step guide to making decisions.

When using the five-step decision process,which one of the following steps should be done first?

________ costs are expected future costs and relevant revenues are expected future revenues that differ between the optional courses of action being considered.

A decision model is a formal method for making a choice,frequently involving both quantitative and qualitative analyses.

Relevant-cost analysis generally emphasises ________ factors that can be expressed in financial terms.

The textbook discusses a five-step decision process.Briefly explain each of the five steps. _ _

What could feedback regarding previous actions affect?

Management accountants work with managers by analysing and presenting relevant data to guide decisions.

Which of the following does a decision model involve?

Sunk costs:

________ factors are outcomes that are difficult to measure accurately in numerical terms.

For decision making,a listing of the relevant costs:

When using the five-step decision process,which one of the following steps should be done last?

Just because qualitative factors and quantitative non-financial factors cannot be measured easily in financial terms does not make them:

Place the following steps from the five-step decision process in order: A = Make predictions about future costs B = Evaluate performance to provide feedback C = Implement the decision D = Choose an alternative

What is the formal process of choosing between alternatives known as?

Quiz 10: Decision Making and Relevant Information

Which of the following costs always differs among future alternatives?

Good managers use a five-step guide to making decisions.

When using the five-step decision process,which one of the following steps should be done first?

________ costs are expected future costs and relevant revenues are expected future revenues that differ between the optional courses of action being considered.

A decision model is a formal method for making a choice,frequently involving both quantitative and qualitative analyses.

Relevant-cost analysis generally emphasises ________ factors that can be expressed in financial terms.

The textbook discusses a five-step decision process.Briefly explain each of the five steps. _____________________________________________________________________________________________ _____________________________________________________________________________________________

What could feedback regarding previous actions affect?

Management accountants work with managers by analysing and presenting relevant data to guide decisions.

Which of the following does a decision model involve?

Sunk costs:

________ factors are outcomes that are difficult to measure accurately in numerical terms.

For decision making,a listing of the relevant costs:

When using the five-step decision process,which one of the following steps should be done last?

Just because qualitative factors and quantitative non-financial factors cannot be measured easily in financial terms does not make them:

Place the following steps from the five-step decision process in order: A = Make predictions about future costs B = Evaluate performance to provide feedback C = Implement the decision D = Choose an alternative

What is the formal process of choosing between alternatives known as?

The textbook discusses a five-step decision process.Briefly explain each of the five steps. _ _