& Which of the following stages of the management decision-making process is imp

Question

& Which of the following stages of the management decision-making process is improperly a b. c. d Evaluate possble courses of action Make decision Assign responsbity for te decision ldentry the problem. ldenfy the problem Determine possible courses of action Assign responsiblity for decision Determine possible courses of action 9 Which of the following is not a true statement? b· Incremental analysis is the same as CP analysis. c. Incremental analysis is useful in making decisions. d. Incremental analysis focuses on decisions that involve a choice among alternative courses of action. 10. Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows a. Income would decrease by $8,000. c Income would increase by $140,000 b. Income would increase by $8,000. d. Income would increase by $40,000 Martin Company incurred the following costs for 70,000 units: Variable costs $420,000 Fuxed costs392,000 11. Martin has received a special order from a foreign company for 3,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $6,300 for shipping. If Martin wants to eam $6,000 on the rdewhat should the unit price be? 12. A company's unit costs based on 100,000 units are: Variable costs Fixed costs $75 30 The normal unit sales price per unit is $165. A special order from a foreign company has been received for 5,000 units at $135 a unit. In order to fulfill the order, 3,000 units of regular sales would have to be foregone. The opportunity cost associated with this order is a, $225,000. b. $495,000- c. $270,000, d. $405,000. NF Toy Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and NF Toy would sell it for $52. The cost to assemble the product is estimated at $17 per unit and the company believes the market would support a price of $68 on the assembled unit. What decision should NF Toy make? a. Sell before assembly, the company will be better off by $1 per unit b. Sell before assembly, the company will be better off by $16 per unit 13. Process further, the company will be better off by $23 per unit. Process further, the company will be better off by $11 per unit. c. d. PAGE 4

Explanation / Answer

Ans 8: Option B

Reason: first the problem is idnetified and based on its analysis responsibility is delegated to take the decision,

Ans 9: Option B

Reason: Incremental analysis only take into account changes between two alternatives, CVP analysis takes all factor into consideration.

Ans 10: Option D

Solu: increase in Profit = Units Sold x (Selling Proce per unit - Variable Cost per Unit)

                                   = 1000 Units x(140-100) = $ 40000

Ans 11: Option D

Solution: Required Sales = Required Profit + Shipping Cost + Variable Expenses

                                    = $ (6000 +6300+[(420000/7000)x3000Units])

                                    = $ 30300

               Sales Price per Unit = $ 30300/1000 Units = $ 10.10

Ans 12: Option C

Solu: Oppourtunity Cost =3000 units x ($165-75)

                                    = $ 270000

Ans 13; Option A

Solu: Profit on Sell Before assembly= $ 52-24 = $ 28

        Profit on Sell After assembly= $ 68-(24+17) = $ 27

          Decrease in Profit = $ 28-27= $1

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