exam 6

Question 1

consists of choosing among alternatives with an immediate or limited end in view. also referred to as tactical decisions

Answer 1

Short run decision making

Question 2

a specific set of procedures that produces a decision, can be used to structure the decision maker’s thinking and to organize the information

Answer 2

decision making model

Question 3

Step 1. Recognize and define the problem.
 Step 2. Identify alternatives as possible solutions to the problem. Eliminate
alternatives that clearly are not feasible.
 Step 3. Identify the costs and benefits associated with each feasible alternative. Classify costs and benefits as relevant or irrelevant, and eliminate irrelevant ones from consideration.
 Step 4. Estimate the relevant costs and benefits for each feasible alternative.
 Step 5. Assess qualitative factors.
 Step 6. Make the decision by selecting the alternative with the greatest overall net benefit.

Answer 3

Steps of the decision making model

Question 4

possess two characteristics:  they are future costs AND

 they differ across alternatives

Answer 4

relevant costs

Question 5

is the benefit sacrificed or foregone when one alternative is chosen over another.

Answer 5

opportunity costs

Question 6

cost that cannot be affected by any future action.

Answer 6

sunk cost

Question 7

decisions involving a choice between internal and external production.

Answer 7

make-or-buy decision

Question 8

focus on whether a specially priced order should be accepted or rejected.
These orders often can be attractive, especially when the firm is operating below its maximum productive capacity.

Answer 8

special-order decisions

Question 9

have common processes and costs of production up to a split-off point. At that point, they become distinguishable as separately identifiable products.

Answer 9

joint products

Question 10

The point of separation

Answer 10

split off point

Question 11

efers to the relative amount of each product manufactured (or service provided) by a company.

Answer 11

product mix decisions

Question 12

Every firm faces limited resources and limited demand for each product

Answer 12

constraints

Question 13

a percentage applied to the base cost.

Companies that bid for jobs routinely base bid price on cost.

Answer 13

Markup

Question 14

a method of determining the cost of a product or service based on the price (target price) that customers are willing to pay

Answer 14

Target costing

Question 15

nclude the process of planning, setting goals and priorities, arranging financing, and using certain criteria to select long-term assets.

Answer 15

capital investment decisions

Question 16

The process of making capital investment decisions often is referred to as

Answer 16

capital budeting