All of the following statements describe qualities of relevance except:
A) Relevant information requires a high degree of precision.
B) Relevant information differs between the alternatives.
C) Relevant information is future-oriented.
D) Relevant informat
A
Select the correct statement regarding relevant costs and revenues.
A) Relevant costs are also known as unavoidable costs.
B) Relevant costs are only those that are based on past experience.
C) Relevant revenues must differ between the alternatives.
D) Al
C
3
C
Alex brought his lunch today but now a co-worker has asked him to go to the deli across the street. Select the correct statement from the following.
A) The cost of the lunch Alex had brought is relevant to Alex's decision to have lunch with his friend.
B)
D
Select the correct statement regarding relevant revenues.
A) Relevant revenues must not differ between the alternatives being considered.
B) Past or future revenues may be relevant.
C) Relevant revenues must make a difference in the decision under conside
C
Bates Company plans to add a new item to its line of consumer product offerings. Two possible products are under consideration. Each unit of Product A costs $6 to produce and has a contribution margin of $3, while each unit of Product B costs $12 and has
A
Which of the following is not a possible alternate term for costs that can be eliminated by taking a specified course of action?
A) Avoidable costs
B) Opportunity costs
C) Relevant costs
D) Differential costs
B
For purposes of decision making, avoidable costs are costs that:
A) were incurred in the past.
B) will not be incurred in the future, regardless of the alternative chosen.
C) differ between alternatives.
D) None of the above.
C
Relevant costs are often referred to as:
A) Unavoidable costs
B) Differential costs
C) Sunk costs
D) All of the above
B
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C
Which of the following statements is true?
A) Fixed costs are sometimes relevant for decision making.
B) Opportunity costs are never relevant to decision making.
C) Information must be exactly accurate to be relevant to decision making.
D) A cost that is
A
12
C
Great Outdoors Company operates a store in downtown Denver that has five departments including a fishing department. If the fishing department is closed, the store manager's position will not be affected, but if the entire store is closed, the manager wil
C
Select the incorrect statement regarding relevant costs and revenues.
A) To be relevant, a cost or revenue must be future-oriented and must differ between the alternatives.
B) Sunk costs are never relevant for decision-making purposes.
C) Differential rev
C
Select the incorrect statement regarding sunk costs.
A) Sunk costs cannot be avoided.
B) Sunk costs are relevant if they differ between the alternatives.
C) Sunk costs are costs that have been incurred in past transactions.
D) Sunk costs include historica
B
Rachel is deciding whether to remain in the home she has lived in for the past ten years, which is located very near her work, or to move into a newer home that is located in the suburbs further from her job. The old house was purchased for $160,000 and h
B
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A
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B
Select the correct statement regarding relevant costs and revenues.
A) Sunk costs are relevant for decision-making purposes.
B) Relevant costs are frequently called unavoidable costs.
C) Direct labor is an example of a unit-level cost.
D) Only variable co
C
Expected future revenues that differ among the alternatives under consideration are often referred to as:
A) Alternative revenues.
B) Preferential revenues.
C) Relative revenues.
D) Differential revenues.
D
21
B
Ethan paid $3 for a bottle of ThirstAid. Later while on a hiking trip, she was offered $8 for the ThirstAid. Select the correct statement from the following:
A) The $8 offer is not relevant if Ethan refuses to sell the ThirstAid.
B) If Ethan drinks the Th
C
The benefits sacrificed when one alternative is chosen over another are referred to as:
A) Avoidable costs.
B) Opportunity costs.
C) Sacrificial costs.
D) Beneficial costs.
B
Lindsay purchased a raffle ticket for $5. Just before the grand prize drawing two people tried to buy her ticket. The first person offered $30, and another offered $65. What is Lindsay's opportunity cost of keeping the raffle ticket?
A) $60
B) $65
C) $90
B
Select the correct statement regarding opportunity costs.
A) Opportunity costs need not be considered in decision making.
B) Opportunity costs are not recorded in a firm's financial accounting records.
C) Opportunity costs represent sunk costs.
D) All of
B
Select the incorrect statement concerning opportunity costs.
A) Opportunity costs are relevant costs.
B) Opportunity costs are cumulative.
C) Opportunity costs are future-oriented.
D) Opportunity costs are not recorded in the books.
B
Select the correct statement regarding quantitative and qualitative information.
A) To be relevant, qualitative data need not be quantified.
B) Relevant information cannot have both quantitative and qualitative characteristics.
C) Qualitative data should
A
Qualitative information is relevant when:
A) it makes a difference in the decision and it differs between the alternatives.
B) it differs between the alternatives only.
C) it makes a difference in the decision only.
D) None of the above.
A
Which of the following items is qualitative?
A) Cost of new machine
B) Depreciation of existing machine
C) Book value of the existing machine
D) Degree to which the new machine can be integrated with existing machinery
D
The cost that is avoided when a company eliminates a single item of a product or service is a:
A) Unit-level cost.
B) Facility-level cost.
C) Product-level cost.
D) Batch-level cost.
A
Which of the following costs is an example of a product-level cost?
A) Machine setup costs
B) Patent filing costs
C) Materials and labor costs
D) Shipping and handling costs
B
Which of the following costs is an example of a batch-level cost?
A) Assembly setup costs
B) Materials handling costs
C) Shipping and handling costs to ship an order to a customer
D) All of the above.
D
Engineering design costs are generally referred to as:
A) Batch-level costs.
B) Facility-level costs.
C) Unit-level costs.
D) Product-level costs.
D
The Page Turner Publishing Company is trying to decide whether or not to accept a special order for its latest blockbuster. In making this decision, which level of costs will most likely be relevant to the decision?
A) Batch-level costs
B) Facility-level
C
35
A
36
A
37
C
38
A
39
D
All of the following are variables that could be considered in a decision to outsource a component that is currently being produced in house. Which of the following is not likely to be relevant?
A) The impact on employee morale
B) The book value of equipm
B
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A
42
B
43
D
Mountain Gear has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines
A
Sunk costs:
A) are not considered when evaluating new proposals.
B) differ among the alternatives.
C) impact the future.
D) are relevant.
A
Jack currently works for a law firm full time and earns $60,000 a year. He is thinking of quitting his job to pursue a medical degree. Medical school will cost him $100,000 per year. If Jack quits his job and goes to medical school, the salary he currentl
C
Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living's variable manufacturing costs. Which type of cost is considered a
C
Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living's total variable manufacturing costs. Which type of cost is consid
A
Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living's variable manufacturing costs. Variable selling and administrativ
A
When evaluating alternatives, what type of costs should be considered?
A) Relevant costs
B) Sunk costs
C) Prevention costs
D) Fixed costs
A
Special order decisions involve:
A) an offer to sell goods at a price that is higher than normal.
B) buying goods from other companies rather than making them internally.
C) an offer from a customer to buy goods at a lower-than-normal selling price.
D) No
C
Which of the following statements is incorrect?
A) An outsourcing decision typically affects only product-level costs.
B) Accepting a special order will involve incurring unit-level costs.
C) Eliminating a business segment often allows a company to avoid
A
Gibbs Corporation makes indoor gas fireplaces. A standard fireplace includes unit-level materials, labor, and overhead costs. In addition, the company incurs product-level engineering and advertising costs. The sales staff is paid a 5% commission on each
C
Which of the following is a true statement regarding product-level costs?
A) Product-level costs are only relevant to a decision when adding a product to a company's product line.
B) Product-level costs are generally relevant to outsourcing decisions.
C)
B
All of the following are examples of product-level costs except:
A) product inspection costs.
B) product advertising costs.
C) engineering design costs.
D) patent costs.
A
56
C
57
D
58
D
Which of the following statements is true?
A) Outsourcing decreases the extent of a company's vertical integration.
B) Reputation of the supplier is a critical issue in an outsourcing decision.
C) An outsourcing decision involves a purchase offer from a c
D
Asset replacement decisions involve:
A) choices between continuing using existing materials or replacing them with less expensive materials.
B) choices between closing down or continuing to operate a segment of a business.
C) choices between continuing op
C
Which costs are relevant for equipment replacement decisions?
A) Unit-level costs
B) Batch-level costs
C) Product-level costs
D) All of the above.
D
Breezy Company is disposing of equipment that was originally purchased for $600,000 and has $240,000 of accumulated depreciation to date. The same equipment would cost $800,000 to replace. What is the total amount of sunk cost in this decision?
A) $240,00
B
Max bought a ticket to the championship baseball game for $75. Someone approaches him outside the stadium and offers him $175 for his ticket. If Max decides to go to the game, instead of selling his ticket, how much does it cost Max to go to the game?
A)
C
Pilot Motors Corporation is an automobile manufacturer. The company produces its own motors, tires, and other automobile parts. Pilot has the opportunity to purchase tires from another manufacturer instead of producing the tires in its own facility. This
A