Companies often consider outsourcing so they can focus on their core competencies A constraint is a factor that restricts production or sale of a product

1. Companies often consider outsourcing so they can focus on their core competencies

t

2. A constraint is a factor that restricts production or sale of a product.

t

3. When making product mix decisions, companies are most profitable when they maximize production of the product with the greatest sales demand.

f

4. Which of the following best describes an "opportunity cost"?
   Expected future costs that differs among alternatives
   Benefits foregone by choosing an alternative course of action
   Costs that were incurred in the past and cannot be changed
   The distribution of all products to be sol

b

5. Which of the following best describes "total cost of product or service"?
   Benefits foregone by not choosing an alternative course of action
   A factor that restricts production or sales of a product
   All costs incurred along the value chain in connection with the product or service.
   Costs that were incurred in the past and can not be changed

c

6. The effect of a plant closing on employee morale is an example of which of the following?
   A qualitative factor
   A quantitative factor
   A sunk cost
   Variable cost

a

7. When deciding whether to accept a special order, managers should consider all of the following EXCEPT:
   available excess capacity.
   the variable costs associated with the special order.
   fixed costs that will not be affected by the order.
   the affect of the order on regular sales

c

8. Which of the following describes the products and services of companies that are price-setters?
   They tend to be commodities.
   They are priced by managers using a target-costing emphasis.
   They tend to have a lot of competitors.
   They tend to be unique.

d

9. In a sell or process further decision, the company should process further if the extra:
   cost of processing further is greater than the incremental revenue.
   revenue from processing further is less than the incremental cost.
   cost of processing further is less than the incremental revenue.
   cost of processing further is the same as the incremental revenue.

c

10. Common fixed costs that are allocated between departments are generally:
    direct fixed costs of the department.
    direct fixed costs of other departments.
    relevant to the decision of whether to drop the department.
    irrelevant to the decision of whether to drop the department.

d