Exam (elaborations)
MBA 620 Final Exam Questions And Answers Latest Update
- Course
- MBA 620
- Institution
- Southern New Hampshire University
MBA 620 Final Exam Questions And Answers Latest Update
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Solution 2024/2025Pepper
MBA 620 Final Exam Questions And Answers
Latest Update
Future costs that differ among competing decision alternatives (a.k.a.,
differential or incremental costs) ANS✔✔ relevant costs
Revenues that differ when one alternative is selected over another. For
example, if a company is deciding whether to keep all customers
(Alternative 1) or drop certain less profitable customers (Alternative 2),
difference between total revenue for Alternative 1 and total revenue for
Alternative 2. ANS✔✔ differential revenues
Costs that differ when one alternative is selected over another. For
example, if a company is deciding whether to make a product internally
(Alternative 1) or outsource production (Alternative 2), difference between
costs for Alternative 1 and Alternative 2 ANS✔✔ differential costs
Reviewing the differential revenues and costs for alternative courses of
action; this is used by management to evaluate different alternatives and to
select the best course of action ANS✔✔ differential analysis
Means a company is deciding whether to make a product internally or buy
the product from an outside firm. Differential analysis helps managers focus
solely on the costs that are relevant to the make-or-buy decision. Variable
production costs are typically differential costs. Fixed production costs must
be reviewed on a case-by-case basis to determine which costs are
differential and which are not. Managers typically select the alternative with
the lowest cost. ANS✔✔ make-or-buy decision
, Solution 2024/2025
Pepper
A cost that can be avoided, or eliminated, if one alternative is chosen over
another (also differential costs) ANS✔✔ avoidable cost
How is differential analysis used in deciding whether to keep or drop
product lines?
A ____________ __________ _________ ___________ is prepared, which includes
information for each product line and a total column for all product limes.
Another _____________ _____________ is prepared in the same format, which
excludes the product line the company would like to drop. Decision makers
select the alternative with the highest ___________ ANS✔✔ contribution
margin income statement, income statement, profit
Can be traced directly to a product line, and are typically avoidable if the
product line is eliminated ANS✔✔ direct fixed costs
Cannot be traced directly to a product line, and are assigned to product
lines using an allocation process. These costs are typically not differential
costs since they are allocated to remaining products if a product line is
dropped ANS✔✔ allocated fixed costs
Managers often use ________ as a determining factor for deciding whether to
keep or drop customers and products ANS✔✔ profit
For product line decisions, _______ and _______ are assigned to individual
product lines. For customer decisions, both are assigned to individual
customers. ANS✔✔ revenues and costs
, Solution 2024/2025
Pepper
Is used for both product line and customer decisions to asses the
profitability of various alternatives ANS✔✔ contribution margin income
statement
What two assumptions must be considered when evaluating special order
scenarios? ANS✔✔ capacity and pricing
Acquiring or maintaining fixed assets that will be used for more than a year
such as buildings and equipment ANS✔✔ capital expenditures
Deciding which long-term investments to make ANS✔✔ capital budgeting
Decisions involve using company funds to invest in long-term assets such as
production facilities and equipment; these decisions typically involve
projects that affect cash flows of the company for many years ANS✔✔
capital budgeting decisions
Describes the value of future cash flows (both in and out) in today's dollars
ANS✔✔ present value
Three steps required to evaluate investments using the net present value
are:
1. Identify the amount and timing of the _________ _________ required over
the life of the investment
2. Establish an appropriate interest rate to be used for evaluating the
investment, called the _________ ___ _________
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