A 2 1/2-Year Old Child Watches an Experimenter Hide a Toy

question 56

Multiple Choice

A 2 1/2-year old child watches an experimenter hide a toy in a large room, and later tries to find a smaller version of the toy in a small, scale-model version of the room. Under what circumstances, if any, is the child likely to find the toy quickly?

• A) Only if the child has been told to treat the small room as a model or symbol of the larger room.
• B) Only if the child has been given training at map-reading.
• C) Only if the child has been told that the experimenter shrunk the room.
• D) Under no conditions.

Understand the concepts of relevant and irrelevant costs in decision-making.

Recognize the importance of joint costs and the split-off point in decisions related to further processing.

Identify the role of fixed and variable costs in product discontinuation decisions.

Understand the concept of vertical integration and its implications for economies of scale and control over the supply chain.

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Definitions:

Standard Costs

Predetermined costs for materials, labor, and overhead used as a benchmark to measure actual performance against.

Management

The process of planning, organizing, leading, and controlling an organization's resources to achieve its goals.

Stockholders

Stockholders, or shareholders, are individuals or entities that legally own one or more shares of stock in a joint-stock company, making them partial owners of that company.

Variable Factory Overhead Controllable Variance

The difference between actual variable overhead and the standard cost of variable overhead that management could control or influence.