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Cost Accounting 101 Practice Test: Basics of Decision Making
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Avg score: 50% • Most missed: “Which of following are risks of outsourcing the production of a part?”
Here are some ways cost accounting can help with decision making: Pricing: Cost accounting can help managers determine the cost of production and selling price of a product or service. It can also help businesses formulate competitive pricing strategies. Outsourcing: Cost accounting can provide information for decision-making related to outsourcing and make-or-buy decisions. Resource allocation: Cost accounting can help businesses make informed decisions about resource allocation. Budgeting: Cost accounting can help managers optimize resources, control costs, and achieve organizational... Show more
Cost Accounting 101 Practice Test: Basics of Decision Making
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25 Questions

1. If a manufacturer chooses to continue purchasing direct materials from a supplier because of the ongoing relationship that has developed over the years, the decision is based partially on qualitative factors.
2. Costs that CANNOT be changed by any decision made now or in the future are:
3. Relevant costs of a make-or-buy decision include all of the following EXCEPT:
4. To maximize profits, managers should produce more of the product with the greatest contribution margin per unit of the constraining resource.
5. Qualitative factors:
6. ________ would be a consideration in a make-or-buy decision.
7. Sometimes qualitative factors are the most important factors in make-or-buy decisions.
8. Variable cost per unit is the best product cost to use for one-time-only special order decisions.
9. Constraints may include:
10. When deciding whether to discontinue a segment of a business, managers should focus on:
11. How can Lisa Braun encourage her salespeople to promote the more profitable model?
12. If additional capacity is added to produce another 10,000 units, this may increase the fixed cost of rent.
13. ________ is relevant in a decision to replace equipment.
14. In product-mix decisions:
15. A sunk cost can never be relevant.
16. Smiley Face Company manufactures signs from direct materials to the finished product. This is considered:
17. Costs are relevant to a particular decision if they:
18. Employee morale at Dos Santos, Inc., is very high. This type of information is known as a:
19. An example of a quantitative factor for the decision-making process is:
20. When there is excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price when:
21. Full costs of a product include variable costs, but not fixed costs.
22. Determining which products should be produced when the plant is operating at full capacity is referred to as:
23. For a particular decision, differential revenues and differential costs are always relevant.
24. Decisions about whether a producer of goods or services will insource or outsource are also called make-or-buy decisions.
25. Product mix decisions:

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