1			What is the first step in the decision making process?
			A)	Specify the criteria by which the decision is to be made.
			B)	Consider the strategic issues regarding the decision context.
			C)	Perform an analysis in which the relevant information is developed and analyzed.
2			When is depreciation NOT considered a sunk cost in decision-making?
			A)	When deciding whether or not to accept a special order.
			B)	When deciding whether or not to upgrade factory equipment.
			C)	When determining the optimal product mix.
			D)	When tax effects are considered.
3			Committed or "sunk" costs are generally:
			A)	not fixed.
			B)	small in amount.
			C)	from bad decisions.
			D)	in the past.
			E)	recoverable in trade.
4			Operating at or near full capacity will require a firm considering a special order to recognize the:
			A)	opportunity cost arising from lost sales.
			B)	value of full employment.
			C)	time value of money.
			D)	need for good management.
			E)	value of saying "No."
5			The value chain analysis in make-lease-buy decisions often leads a firm to make use of:
			A)	conflict resolution.
			B)	restrictive implementation.
			C)	contract manufacturing.
			D)	functional combination.
			E)	intensive redistribution.

USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 6, 7 AND 8:

Berry Company manufactures 30,000 component parts per year with the following costs:

Direct materials	$210,000
Direct labor	300,000
Manufacturing overhead (40% variable)	240,000

We can buy the component parts from a supplier for $19.

6			What is the maximum price that we would be willing pay for the parts?
			A)	$21.80 per unit
			B)	$25.00 per unit
			C)	$23.00 per unit
			D)	$20.20 per unit
7			What is the effect on income if Berry purchases the component parts from the supplier?
			A)	$36,000 increase
			B)	$180,000 increase
			C)	$606,000 decrease
			D)	$144,000 increase
8			Which of the following would Berry be least concerned about when analyzing to the above make-or-buy decision?
			A)	How long will the supplier provide the $19 price on the component part?
			B)	Will the component part be delivered on time?
			C)	Will the component part meet our quality standards?
			D)	Is our capacity equal to 30,000 units?
9			Boone Company produces a product that can be sold for $50,000 at an intermediate stage. If Boone finishes the product, they will incur $15,000 of additional material costs and another $10,000 in labor and overhead costs. When finished, Boone will be able to sell the product for $90,000. Which of the following answers is correct?
			A)	Sell now
			B)	Finish the product because profits will increase by $40,000.
			C)	Finish the product because profits will increase by $25,000.
			D)	Finish the product because profits will increase by $15,000.
			E)	Finish the product because profits will increase by $65,000.
10			The decision to keep or drop products or services involves strategic consideration of the:
			A)	potential impact on remaining products or services.
			B)	impact on employee morale.
			C)	impact on organizational effectiveness.
			D)	growth potential of the firm.
			E)	All of the above answers are correct.
11			Heartland Health Club plans to expand their swimming programs. They will receive $40,000 from the city and another $16,000 from the local United Way for the program. Heartland has determined that they will need to hire two full-time swimming instructors for $26,000 each and will incur another $20,000 in operating costs. If they project that 1,000 kids will take swimming lessons, how much will Heartland need to charge per kid in order to breakeven?
			A)	$56.00
			B)	$72.00
			C)	$16.00
			D)	$12.00
12			A useful device for solving production problems involving multiple products and limited resources is:
			A)	gross sales per unit of product.
			B)	contribution per unit of scarce resource.
			C)	net profit per unit of product.
			D)	total expense.
			E)	total benefit.
13			When there is only one production constraint and excess demand, it is generally best to focus production and sales on the product with the highest what?
			A)	Contribution per unit of scarce resource.
			B)	Margin of Safety.
			C)	Contribution margin in dollars.
			D)	Operating Leverage.