Chapter 11 Differential Analysis

Chapter 11 Differential Analysis

Fill in the Blank

When performing an analysis, we need information that is...

Multiple Select

What are the two characteristics of relevant information?

• Has to differ among alteratives

• Has the be the same among alternatives

• Has to have an impact on the future

• Cannot have an impact on the future

Fill in the Blank

What is an example of a cost that is IRRELEVANT?

Should we continue the project or abandon it?

Multiple Choice

Continue or abandon?

• Continue

• Abandon

Fill in the Blank

What do we mean when we are debating a make or buy decision?

Multiple Select

What two steps Dr. Bryan listed are involved in a make or buy decision?

• Determine the impact on profitability

• Determine the impact on timeliness

• Consider qualitative factors

• Consider all factors

Multiple Select

What are the qualitative factors that need to be considered?

• Impact on cost

• Impact on people

• Reliability of the supplier

• Quality of the product supplied

• Walid and Robert Co. currently use 20,000 units of redbull annually

• Kory Co. has offered to sell redbull to Walid anf Robert for $4.50 per unit.

• Walid and Robert Co. have determined for 20,000 units of redbull, DM cost $1.00 per unit, $1.50 for DL, $3.00 for VOH, and $4.50 for FOH

• 50% of FOH is avoidable if they buy redbull from Kory, and they can rent out their factory space for $5,000 annually if they buy

• What would be the effect on profitability if Walid and Robert Co. buy the redbull from Kory?

• 
  

  
  

• Walid and Robert Co. currently use 20,000 units of redbull annually

• Kory Co. has offered to sell redbull to Walid anf Robert for $4.50 per unit.

• Walid and Robert Co. have determined for 20,000 units of redbull, DM cost $1.00 per unit, $1.50 for DL, $3.00 for VOH, and $4.50 for FOH

• 50% of FOH is avoidable if they buy redbull from Kory, and they can rent out their factory space for $5,000 annually if they buy

• What would be the effect on profitability if Walid and Robert Co. buy the redbull from Kory?

• 
  

Multiple Choice

What is the affect on profitability if we buy?

• $70,000

• ($70,000)

• $25,000

• ($25,000)

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