MULTIPLE CHOICE11 - MULTIPLE CHOICE 42. Feedback regarding...

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MULTIPLE CHOICE 42. Feedback regarding previous actions may affect a. future predictions. b. implementation of the decision. c. the decision model. d. all of the above. Answer: d Difficulty: 2 Objective: 1 43.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 a. DCAB b. CDAB c. ADCB d. DCBA Answer: c Difficulty: 2 Objective: 1 44. The formal process of choosing between alternatives is known as a. a relevant model. b. a decision model. c. an alternative model. d. a prediction model. Answer: b Difficulty: 1 Objective: 1 45. Ruggles Circuit Company manufactures circuit boards for other firms. Management is attempting to search for ways to reduce manufacturing labor 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? Currently Proposed Required machine operators 5 4.5 Materials-handling workers 1.25 1.25 Employee average pay $8 per hour $9 per hour Hours worked per employee 2,100 2,000 a. Do not change the production floor. b. Rearrange the production floor. c. Either, because it makes no difference to the employees. d. It doesn't matter because the costs incurred will remain the same. Answer: b Difficulty: 2 Current operations: 5 workers x 2,100 hours x $8.00 = $84,000 Proposal: 4.5 workers x 2,000 hours x $9.00 = $81,000
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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 46 AND 47. LeBlanc Lighting 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 3,000 units. Currently Projected Demand 20,000 units 17,000 units Selling price $4.50 $5.00 Incremental cost per unit $3.00 $3.00 46. If the price increase is implemented, operating profit is projected to a. increase by $4,000. b. decrease by $4,000. c. increase by $6,000. d. decrease by $4,500. Answer: a Difficulty: 2 [17,000 x ($5 - $3)] [20,000 x ($4.50 - $3.00)] = increase of $4,000 47. Would you recommend the 50-cent price increase? a. No, because demand decreased. b. No, because the selling price increases. c Yes, because contribution margin per unit increases. d. Yes, because operating profits increase. Answer: d Difficulty: 2 Objective: 1 48. For decision making, a listing of the relevant costs a. will help the decision maker concentrate on the pertinent data. b. will only include future costs. c. will only include costs that differ among alternatives. d. should include all of the above.
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