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.

Answer 1

Routine or operational decisions

Question 2

Examples of Routine or operational decisions.

Answer 2

Ordering office supplies, scheduling meetings, or assigning work tasks to team members.

Question 3

medium-term decisions that align with the overall organizational strategy; they require careful analysis and consideration of various factors.

Answer 3

Tactical decisions

Question 4

Examples of Tactical decisions

Answer 4

Launching a new product line, revising marketing strategies, or adjusting pricing structures.

Question 5

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

Answer 5

Strategic decisions

Question 6

Strategic decisions sample

Answer 6

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

Question 7

a choice made to deal with a non-repetitive, tactical situation. typically involve situations that fall outside of the normal operating procedures of a business.

Answer 7

Non-Routine Operating Decisions

Question 8

sometimes referred to relevant costing, incremental costing or differential costing

Answer 8

Non-Routine Operating Decisions

Question 9

those that will differ between different alternatives

Answer 9

Relevant Costs

Question 10

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

Answer 10

Differential cost

Question 11

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

Answer 11

Avoidable

Question 12

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

Answer 12

Opportunity

Question 13

change from one alternative to another.

Answer 13

Differential or incremental

Question 14

Examples of incremental costs

Answer 14

direct materials, direct labor, variable OH, variable expenses.

Question 15

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

Answer 15

Future oriented

Question 16

______ or past costs or historical costs are not relevant

Answer 16

Sunk costs

Question 17

the relevant costs of producing the product component are compared with the purchase price of buying it from an outside supplier; avoidable fixed costs and opportunity costs are considered depending on the case.

Answer 17

Make or Buy a Product Component

Question 18

The relevant information is the difference between the variable manufacturing costs to produce the special order and expected revenues.

Answer 18

Accept or reject a special sales order

Question 19

If other sales are affected, then the company would have to consider the ____ sales in making the decision

Answer 19

lost

Question 20

If the company is operating at full capacity, the special order may be _____

Answer 20

rejected

Question 21

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

Answer 21

Continue or drop a business segment

Question 22

The basic decision rule is: Process further if the incremental revenue is from such processing exceeds the incremental costs.

Answer 22

Sell-as-is or Process Further

Question 23

If continuing the operations will result to greater sales than the ______________ _________, it is better to continue operating.

Answer 23

shutdown point

Question 24

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

Answer 24

Shutdown point

Question 25

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

Answer 25

Bidding

Question 26

should not be less than the incremental costs.

Answer 26

Minimum bid price

Question 27

refer to the highest possible benefit that may be derived from the best alternative use of capacity

Answer 27

Opportunity costs

Question 28

when resources are limited resource optimization is about getting the most out of them.

Answer 28

Scarce Resources Optimization

Question 29

it involves identifying, prioritizing, and utilizing resources in the most efficient and effective manner possible.

Answer 29

Scarce Resources Optimization

Question 30

sales and production should be allocated to the product that gives the ________ profit per scarce resource.

Answer 30

Highest

Question 31

if the scarce resource is ______ ________ _______, then the product that gives the highest contribution margin per direct labor hours should be produced

Answer 31

Direct labor hours

Question 32

if the expected incremental sales is greater than the incremental cost of the of keeping the product, then ___ __ _______.

Answer 32

Sell it later

Question 33

When replacing an asset, there will be an immediate ______ ________but there are possible savings from maintenance costs.

Answer 33

Cash Outflow

Question 34

The _____ value of the old asset, if any, can also be a source of cash inflow.

Answer 34

Salvage

Question 35

When products do not meet the standard specifications or are defective, the producer may sell them as_______ or may opt to rework or reprocess them to be sold later at a higher value.

Answer 35

Scrap

Question 36

The profit from reworking should be compared with the profit of selling as scrap without regard to the _____ costs of producing the product.

Answer 36

Past

Question 37

the point at which two different alternatives are equal

Answer 37

Indifference Point

Question 38

whatever alternative is chosen, the outcomes will be the same

Answer 38

Indifference Point

Question 39

this level or point is known as ___ ________ point and at this point total cost of two production methods is same.

Answer 39

Cost indifference