Ch5. Non-routine Operating Decisions

Question 1

part of day-to-day operations and follow established protocols and procedures; they are typically low-risk and require minimal analysis
examples: ordering office supplies, scheduling meetings, or assigning work tasks to team members

Answer 1

routine or operational decisions

Question 2

medium term decisions that align with overall organizational strategy; they required careful analysis and consideration of various factors

examples: launching a new product line, revising marketing strategies, or adjusting pricing structures.

Answer 2

tactical decisions

Question 3

long-term decisions that shape the direction and visions of the organization; they have a significant impact on the overall success growth of the company.

examples: expanding into new markets, acquiring other companies, or diversifying products and services

Answer 3

strategic decisions

Question 4

Types of Decision-making in Management

Answer 4

• routine or operational decisions
• tactical decisions
• strategic decisions

Question 5

Time-effects
- strategic
- tactical

Answer 5

• long term
• mediums/short term

Question 6

concerned management level
- strategic
- tactical

Answer 6

• top executives
• middles and supervisory managers

Question 7

primary interest served
- strategic
- tactical

Answer 7

• financial investors
• customers

Question 8

focus
- strategic
- tactical

Answer 8

• stability and growth
• profitability and liquidity

Question 9

Management accounting techniques used
- strategic
- tactical

Answer 9

• capital budgeting
• std costing, responsibility acctg, short-term budgeting, cost-volume profit analysis, variance analysis, nonroutine operating decisions.

Question 10

• a choice made to deal with a non-repetitive, tactical situations
• these decisions typically involve situations that fall outside of the operating procedures off a business

Answer 10

non-routine operating decisions

Question 11

• non-routine operating decisions use of

Answer 11

• relevant costing,
• sometimes referred to relevant costing, incremental costing or differentials costing

Question 12

present in one alternative but absent in whole or in part in another another alternative

Answer 12

differential cost

Question 13

can be eliminated in whole or in part when one alternative is chosen over another

Answer 13

avoidable

Question 14

contribution to income that is lost when one action is taken over the next best alternative course of action

Answer 14

opportunity

Question 15

list of relevant costs

Answer 15

• differential cost
• avoidable
• opportunity

Question 16

change from one alternatives to another

Answer 16

differential or incremental

Question 17

planned cost, budgeted cost, projected costs or estimated costs; costs that are yet to be incurred in the future.

Answer 17

future oriented

Question 18

features of relevant costs

Answer 18

• differential or incremental
• future oriented

Question 19

not relevant

Answer 19

sunk costs

Question 20

the relevant costs of producing the products component are compared with the purchase price of buying it from an outside supplier; avoidable costs are considered depending

cost:
- variable manufacturing costs that will saved
- fixed cost that can be eliminated
- the purchase price
- opportunity costs or the potential benefits that may be obtained.

Answer 20

make or buy a product component

Question 21

the relevant information is the difference between the variable manufacturing costs to produces the special order and expected revenues

Answer 21

accept or reject a special sales order

Question 22

A business segment or product line should be continued if revenues exceed its costs (positive segment margin)

Answer 22

continue or drop a business segment`

Question 23

the basic decisions rule is: sell it if the incremental revenue is from such processing exceed the incremental costs

Answer 23

sell-as-is or process further

Question 24

is the level of operations where the loss from continuing is equal to the loss from discontinuing

Answer 24

shutdown point

Question 25

if continuing the operations will result to greated sales than the shutdown point,it is better to continue operating

Answer 25

shut down or continue operations

Question 26

offering a particular amount of money for something when competing against other people to buy it

Answer 26

bidding

Question 27

should not be less than the incremental cost

Answer 27

minimum bid price

Question 28

• when resources are limited (____) ___ ____ is about getting the most out of them.
• involves identifying, prioritizing, and utilizing resources in the most efficient and effective manner

Answer 28

scarce resources optimization

Question 29

if the expected incremental sales is greater than the incremental cost of the keeping the product then _____

Answer 29

sell now or later

Question 30

• the decision points involves the cash inflows and cash outflows resulting from ________
• immediate cash flow

Answer 30

replace or retain an asset

Question 31

when products do not meet the standards specifications or are defective, the producers may sell them as a ____ or may opt to _____ or reprocess them to be sold later at a higher value

Answer 31

scrap or rework defective unit

Question 32

• the point at which two different alternatives are equal
• whatever alternatives is chosen, the outcomes will be the same

Answer 32

indifference point

Question 33

the level or points is known as _____ and at this points the total cost of two production methods is the same

Answer 33

cost indifference point