Chapter 11 Differential Analysis

Chapter 11 Differential Analysis

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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

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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 Blanks

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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