MBA 621 Practice Final Questions & Answers
Verified 100% Correct
How managers make decisions
Define business goals
identify alternatives
gather and analyze relevant information
choose best alternative
implement decision
follow up
what is a relevant cost
future costs
costs that differ among alternatives
what is an irrelevant cost
any past (sunk) cost
fixed costs
contribution margin formula
sales - VC
Formula to find minimum price to breakeven (point of indifference) on special orders
NOI/units = x
x + special price = breakeven price
Factors that determine price
brand
product differentiation
product cost
, demand
competition
regulations
marketing costs
price setter
more unique
less competition
emphasize cost-plus pricing
price taker
lacks uniqueness
heavy competition
emphasizes target costing
how can a company improve costs
accept lower profit
cut FC
cut VC
increase volume
change product mix
differentiate product
What is irrelevant when considering discontinuing a product
VC, CM, salary of line manager, advertising (direct), rent (avoidable),
what is relevant when considering discontinuing a product
general factory overhead (allocation), depreciation, general admin expenses
which factors are relevant when considering outsourcing a product
general overhead and depreciation
Verified 100% Correct
How managers make decisions
Define business goals
identify alternatives
gather and analyze relevant information
choose best alternative
implement decision
follow up
what is a relevant cost
future costs
costs that differ among alternatives
what is an irrelevant cost
any past (sunk) cost
fixed costs
contribution margin formula
sales - VC
Formula to find minimum price to breakeven (point of indifference) on special orders
NOI/units = x
x + special price = breakeven price
Factors that determine price
brand
product differentiation
product cost
, demand
competition
regulations
marketing costs
price setter
more unique
less competition
emphasize cost-plus pricing
price taker
lacks uniqueness
heavy competition
emphasizes target costing
how can a company improve costs
accept lower profit
cut FC
cut VC
increase volume
change product mix
differentiate product
What is irrelevant when considering discontinuing a product
VC, CM, salary of line manager, advertising (direct), rent (avoidable),
what is relevant when considering discontinuing a product
general factory overhead (allocation), depreciation, general admin expenses
which factors are relevant when considering outsourcing a product
general overhead and depreciation
