Question

In: Accounting

1. Define the term constraints and give an example. What product should be made first when...

1. Define the term constraints and give an example. What product should be made first when resource constraints exist?

2. True or false. When deciding whether to accept a special order, managers need to consider whether they have available excess capacity.

3. True or false. Cost-plus price minus desired profit equals total cost.

4. True or false. Variable costs are irrelevant to a special decision when those variable costs differ between alternatives.

5. True or false. Companies operating in highly competitive industries are generally price-setters.

6. The benefit foregone by choosing a particular alternative course of action is referred to as a(n)

a. incremental cost.
b. opportunity cost.
c. variable cost.
d. sunk cost.

7. A company's manager would consider which of the following in deciding whether to discontinue its electronics product line?

a. How discontinuing the electronics product line would affect sales of its other products (like CDs)
b. The costs it could save by discontinuing the product line
c. The revenues it would lose from discontinuing the product line
d. All of the above

8. The factor that restricts production or sale of a product is which of the following?

a. Demanding factor
b. Relevant factor
c. Constraint
d. Sunk factor

9. The cost-plus price is described by which of the following?

a. Total cost plus desired profit
b. Revenue at market price plus desired profit
c. Variable cost plus desired profit
d. Target total cost plus desired profit

10. Which of the following describes the products and services of companies that are price-setters?

a. They tend to be commodities.
b. They are priced by managers using a target-costing emphasis.
c. They tend to have a lot of competitors.
d. They tend to be unique.

Solutions

Expert Solution

1.Project constraints are certain things that restrict your project and affect how you manage it. Unfortunately, these constraints are an inevitable part of any project and even though you can discover and categorise them, you can’t ignore them.

So why is it important to define and identify a project’s constraints before you get started? Think of what could happen if you failed to do this at the project planning stage. For example, time is one of the most important constraints in project management – if you take up the project without giving due attention to this limitation, it could have drastic repercussions. Not only could you get stuck for want of adequate planning, but you might even have to scrap the project midway.

2. TRUE

3. TRUE (AS PER COST-PLUS PRICING)

4. TRUE

5.FALSE

6.B. OPPURTUNITY COST

7.D. ALL OF THE ABOVE

8.C. CONSTRAINT

9.A. TOTAL COST PLUS DESIRED PROFIT

10.D. THEY TEND TO BE UNIQUE


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