Which of the following statements best describes a by-product? Multiple Choice A product created along with the main product whose sales value does not cover its cost of production. A product that is produced from material that would otherwise be scrap. A product that usually produces a small amount of revenue when compared to the main product's revenue. A product that has a lower unit selling price than the main unit. A product that has a selling price similar to that of the main product.

Which of the following statements best describes a by-product? Multiple Choice A product created along with the main product whose sales value does not cover its cost of production. A product that is produced from material that would otherwise be scrap. A product that usually produces a small amount of revenue when compared to the main product's revenue. A product that has a lower unit selling price than the main unit. A product that has a selling price similar to that of the main product.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 8MCQ: In a make-or-buy decision, a. the company must choose between expanding or dropping a product line....

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When deciding whether to sell as is or process a product further, managers should ignore which of the following? a. The costs of processing the product thus far b. The cost of processing further c. The revenue if the product is sold as is d. The revenue if the product is processed further
When deciding whether to sell as is or process a product further, managers should ignore which of the following? The costs of processing the product thus far The cost of processing further The revenue if the product is sold as-is The revenue if the product is processed further
Which of the following statements is true? An avoidable fixed production cost incurred before the split-off point in a joint process is relevant in a sell or process further decision. It is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs. Which of the following statements is true? Consistency demands that a cost that is relevant in one decision be regarded as relevant in other decisions as well. Variable costs are always relevant costs in decisions.
Which of the following is not a consideration when a manager is deciding to discontinue a product or product line? Whether the product has a positive or negative contribution margin. Determining if direct fixed costs could be avoided if the product or product line is discontinued. If discontinuing the product or product line will affect sales of remaining products. Not having any free capacity.
Which of the following would reduce net profit margin but have no effect on gross profit margin?a) Reducing the commission rate paid to salesmen.b) Negotiating a lower purchase price for raw materials.c) An increase in IT support costs for the accounting package used.d) Increasing the expected economic lives of machinery used in the production function.
Which of the following is a false statement about scrap and by-products? Select one: a. Both scrap and by-products are incidental outputs to the joint process. b. Management’s goal is to produce both scrap and by-products. c. Both by-products and scrap are salable. d. A by-product has a higher sales value than does scrap.
What is the estimated selling price of a product less any costs necessary to further process the product beyond the split-off point?
When deciding whether we should add or drop a product or segment, we should think about Multiple Choice the product's or segment's traceable costs the impact of dropping the existing product or segment on the remaining products' or segments' sales all of the above are true whether the freed up capacity (from dropping a product or segment) will bring us additional revenue
When making outsourcing decisions, which of the following is true? The expected use of the freed capacity is irrelevant. The variable cost of producing the product in-house is relevant. The total manufacturing unit cost of making the product in-house is relevant. Avoidable fixed costs are irrelevant.
Which of the following is not an application of cost-volume-profit analysis? Setting prices for products and services. Performing strategic “what-if” analyses. Deciding whether to cut a product line. Determining the short-term cost or profit implications of many decisions. Deciding whether to make or buy a given product or service.
Which of the following is true of a company that uses absorption costing? Multiple Choice Net operating income fluctuates directly with changes in sales volume. Fixed production and fixed selling costs are considered to be product costs. Unit product costs can change as a result of changes in the number of units manufactured. Variable selling expenses are included in product costs.
In which scenario would an adjusted sales value be used to assign costs? a. If abnormal losses occur during production of joint products b. If a joint product is to be processed further after the point of separation c. If one of the joint products has negligible market value d. If joint products are separately identifiable before split-off point