1 - Why are historical or past data irrelevant to special decisions?

A. Past data require two or more alternative courses of action. Without such alternatives, past data are irrelevant.
B. Past data are changeable and depend on present or future action and thus would differ under different alternatives.
C.  Past data are unchangeable regardless of present or future action and thus would not differ under different alternatives.
D. Past data provide an element of difference among the alternatives. Without such alternatives, past data are irrelevant.

2 - Describe the accountant's role in decision making.

A. The accountant's role in decision-making is primarily that of a decision maker who is in charge of the management team making decisions. The accountant relies on the financial analysis ofothers, determines what is relevant, and makes final decisions.
B. The accountant's role in decision-making is limited to financial statement analysis. While the accountant may be a part of the management team charged with making decisions, his/her role is strictly limited to financial statement analysis. The accountant should use caution and maintain impartiality at all times.
C. The accountant's role in decision-making is primarily that of a technical expert on relevant information analysis, especially relevant costs. The accountant is usually an information provider, not the decision maker, although the accountant may be part of a management team charged with making decisions.
D. The accountant does not have any role in decision-making. The accountant's job is to provide impartial information analysis on relevant costs and not get involved in any management functions.

3 - "The distinction between precision and relevance should be kept in mind." Explain.

A. Precision is a measure of the accuracy of certain data. It is a non-quantifiable term. Relevance is an indication of the limited data in regards to the facts for the problem at hand.
B. Precision is a measure of the accuracy of certain data. It is a quantifiable term. Relevance is an indication of the pertinence of certain facts for the problem at hand.
C. Precision is a measure of ambiguity in data. It is a theoretical term. Relevance is an indication of the limited data in regards to the facts for the problem at hand.
D. Precision is a measure of elusiveness in data. It is a hypothetical term. Relevance is an indication of the pertinence of certain facts for the problem at hand.

4 - What is the advantage of the contribution approach as compared with the absorption approach?

A. The advantages include a better analysis of cost-volume-profit relationships, clearer presentation of all variable costs, and more relevant arrangement of data for such decisions as make-or-buy or product expansion.
B. The advantages include a better analysis of cost-volume-profit relationships, clearer presentation of cost of goods sold, and better analysis for short-run pricing decisions.
C. The advantages include a clearer presentation of gross margin and more relevant arrangement of data for such decisions as make-or-buy or product expansion.
D. The advantages include a clearer presentation of cost of goods sold and better analysis for long-run pricing decisions.

5 - "The primary classifications of costs are by variable and fixed-cost behavior patterns, not by businessfunctions." Name 3 commonly used terms that describe this type of income statement.

A. Contribution approach, target costing, or indirect costing.
B. Absorption approach, contribution approach, or direct costing.
C. Contribution approach, variable costing, or direct costing.
D. Absorption approach, target costing, or variable costing.

6 - "There is a commonality of approach to various special decisions." Explain.

A. The commonality of approach is a system that tracks the cost allocations of each activity to qualify the cost benefit to produce a product.|
B. The commonality of approach is a rotating summary budget comparing current and future year revenues of various special orders.
C. The commonality of approach is the focus on the differences between future costs and revenues that will differ among the alternatives.
D. The commonality of approach is the identifiable fixed and variable costs allocated to produce a particular product compared to the revenues made if the costs were allocated to non-special decisions.

7 - "Avoidable costs are variable costs." Do youagree? Explain.

A. Yes. Avoidable costs are variable costs (fixed costs are never included) that will continue even if an ongoing operation is changed or deleted.
B. Yes. Avoidable costs are variable costs (fixed costs are never included) that will not continue if an ongoing operation is changed or deleted.
C. No. Avoidable costs are all costs (both variable and fixed) that will not continue if an ongoing operation is changed or deleted.
D. No. Avoidable costs are only fixed costs (variable costs are never included) that will not continue if an ongoing operation is changed or deleted.

8 - Provide three examples of pricing decisions other than the special order.

A. Pricing new products, pricing products sold under private labels, and responding to new prices of a competitor's products.
B. Pricing bids in sealed bidding situations, pricing established products, and pricing in a perfect competition environment.
C. Pricing new products, pricing products sold under public labels, and pricing in a perfect competition environment.
D. Pricing bids in both sealed and open bidding situations, pricing products sold under public labels, and pricing established products.

9 - Why are customers one of the factors influencing pricing decisions?

A. Customers can make the product themselves.
B. Customers can purchase a similar product from another supplier.
C. Customers can buy or do without the product.
D. All of the above.

10 - List three popular markup formulas for pricing.

A. percentage of variable manufacturing costs, percentage of total variable costs, and percentage of full costs.
B. percentage of variable costs, percentage of total manufacturing cost, and percentage of total fixed costs.
C. percentage of total manufacturing cost, percentage of total variable costs, and percentage of total fixed costs.
D. percentage of total expenses, percentage of variable manufacturing costs, and percentage of full costs.

11 - Give two reasons why full costs are more widely used than variable costs for guiding pricing. (Select the two choices that apply.)

A. Price stability is encouraged.
B. Total costs are often ignored because managers' bonuses are based on variable costs.
C. There are different markup rates for each cost category.
D. In the long run, all costs must be recovered to stay in business.

Answer rating: 100% (QA)

1 Answer c past data are unchangeable regardless of present or future action and thus would not differ under different alternatives Explanation In special decision many of the cost are not relevant Sp... View the full answer