Subject: Economics    / General Economics

(TCO 1)For each of the following drivers identify an appropriate activity.

a. # of machines Facility-Level Activities

b. # of setups Batch-Level Activities

c. # of inspections Batch-Level Activities

d. # of orders Batch-Level Activities

e. # of runs Product-Level Activities

f. # of bins or aisles Product-Level Activities

g. # of engineers Facility-Level Activities

2.A master budget

includes only financial aspects of a plan and excludes nonfinancial aspects.
includes broad expectations and visionary results.
is an aid to coordinating what needs to be done to implement a plan.
should not be altered after it has been agreed upon.

3. Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?


4. Relevant costs in a make-or-buy decision of a part include

setup overhead for the manufacture of the product using the outsourced part.
currently used manufacturing capacity that has alternative uses.
annual plant insurance that will remain the same.
corporate office costs that will be allocated differently.

5. Constraints may include

the availability of direct materials in manufacturing.
linear square feet of display space for a retailer.
direct labor in the service industry.
All of the above

6. Jensen Company has relevant costs of $80 per unit to manufacture Part A. A current supplier offers to make Part A for $70 per unit. If capacity is constrained, the opportunity cost of buying Part A from the supplier is


7. The cost function y = 100 + 10X

has a slope coefficient of 100.

is a nonlinear.
has an intercept of 100.

represents a fixed cost.

8. Sunk costs

are relevant.
are differential.
are ignored when evaluating alternatives.
have future implication

9. The conference method estimates cost functions

by mathematically analyzing the relationship between inputs and outputs in physical terms.
using quantitative methods that can be very time consuming and costly.
based on analysis and opinions gathered from various departments.
using time-and-motion studies.

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