Question 1

Canosta Inc.determined that it must expand its capacity to accept a special order.Which situation is likely?

Accepted Answer

A) Unit variable costs will increase. 
B) Fixed costs will not be relevant. 
C) Both variable and fixed costs will be relevant. 
D) The company should accept the order. 
A) Unit variable costs will increase. 
B) Fixed costs will not be relevant. 
C) Both variable and fixed costs will be relevant. 
D) The company should accept the order. C

Question 2

Eddy Company is starting business and is unsure of whether to sell its product assembled or unassembled.The unit cost of the unassembled product is $60 and Eddy Company would sell it for $135.The cost to assemble the product is estimated at $27 per unit and Eddy Company believes the market would support a price of $174 on the assembled unit.What is the correct decision using the sell or process further decision rule?

Accepted Answer

A) Sell before assembly the company will be better off by $27 per unit. 
B) Sell before assembly the company will be better off by $39 per unit. 
C) Process further the company will be better off by $39 per unit. 
D) Process further the company will be better off by $12 per unit. 
A) Sell before assembly the company will be better off by $27 per unit. 
B) Sell before assembly the company will be better off by $39 per unit. 
C) Process further the company will be better off by $39 per unit. 
D) Process further the company will be better off by $12 per unit. D

Question 3

Costs that will differ between alternatives and influence the outcome of a decision are

Accepted Answer

A) sunk costs. 
B) unavoidable costs. 
C) relevant costs. 
D) product costs. 
A) sunk costs. 
B) unavoidable costs. 
C) relevant costs. 
D) product costs. C

Question 4

Which decision will involve no incremental revenues?

Accepted Answer

A) Make or buy decision 
B) Drop a product line 
C) Accept a special order 
D) Additional processing decision 
A) Make or buy decision 
B) Drop a product line 
C) Accept a special order 
D) Additional processing decision

Question 5

Many of the decisions involving incremental analysis have qualitative features but since they are not easily measured they should be ignored.

Accepted Answer

A) True 
 B)False

Question 6

Incremental analysis is most useful

Accepted Answer

A) in developing relevant information for management decisions. 
B) in choosing between capital budgeting methods. 
C) in evaluating the master budget. 
D) as a replacement technique for variance analysis. 
A) in developing relevant information for management decisions. 
B) in choosing between capital budgeting methods. 
C) in evaluating the master budget. 
D) as a replacement technique for variance analysis.

Question 7

An opportunity cost is the potential benefit obtained by using resources in an alternative course of action.

Accepted Answer

A) True 
 B)False

Question 8

What will most likely occur if a company eliminates an unprofitable segment when a portion of fixed costs are unavoidable?

Accepted Answer

A) All expenses of the eliminated segment will be eliminated. 
B) Net income will decrease. 
C) Net income will increase. 
D) The company's variable costs will increase. 
A) All expenses of the eliminated segment will be eliminated. 
B) Net income will decrease. 
C) Net income will increase. 
D) The company's variable costs will increase.

Question 9

Incremental analysis would not be appropriate for

Accepted Answer

A) a make or buy decision. 
B) an allocation of limited resource decision. 
C) elimination of an unprofitable segment. 
D) analysis of manufacturing variances. 
A) a make or buy decision. 
B) an allocation of limited resource decision. 
C) elimination of an unprofitable segment. 
D) analysis of manufacturing variances.

Question 10

In a make-or-buy decision opportunity costs are

Accepted Answer

A) added to the make total cost. 
B) deducted from the make total cost. 
C) added to the buy total cost. 
D) ignored. 
A) added to the make total cost. 
B) deducted from the make total cost. 
C) added to the buy total cost. 
D) ignored.

Question 11

A company is considering eliminating a product line.The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance.If the product line is discontinued

Accepted Answer

A) total net income will increase by the amount of the product line's fixed costs. 
B) total net income will decrease by the amount of the product line's fixed costs. 
C) the contribution margin of the product line will indicate the net income increase or decrease. 
D) the company's total fixed costs will decrease. 
A) total net income will increase by the amount of the product line's fixed costs. 
B) total net income will decrease by the amount of the product line's fixed costs. 
C) the contribution margin of the product line will indicate the net income increase or decrease. 
D) the company's total fixed costs will decrease.

Question 12

The process of evaluating financial data that change under alternative courses of action is called

Accepted Answer

A) double entry analysis. 
B) contribution margin analysis. 
C) incremental analysis. 
D) cost-benefit analysis. 
A) double entry analysis. 
B) contribution margin analysis. 
C) incremental analysis. 
D) cost-benefit analysis.

Question 13

A revenue that differs between alternatives and makes a difference in decision-making is called a(n)

Accepted Answer

A) sales revenue. 
B) incremental revenue. 
C) unavoidable revenue. 
D) irrelevant revenue. 
A) sales revenue. 
B) incremental revenue. 
C) unavoidable revenue. 
D) irrelevant revenue.

Question 14

All of the following are relevant in deciding whether to eliminate an unprofitable segment except the segment's

Accepted Answer

A) sales. 
B) variable expenses. 
C) contribution margin. 
D) fixed expenses. 
A) sales. 
B) variable expenses. 
C) contribution margin. 
D) fixed expenses.

Question 15

A decision whether to continue to make a product or buy it externally depends on the external price and the amount of variable and fixed costs that can be eliminated assuming no alternative uses of resources.

Accepted Answer

A) True 
 B)False

Question 16

The elimination of an unprofitable product line may adversely affect the remaining product lines.

Accepted Answer

A) True 
 B)False

Question 17

Accountants are mainly involved in developing nonfinancial information for management's consideration in choosing among alternatives.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a true statement?

Accepted Answer

A) Incremental analysis might also be referred to as differential analysis. 
B) Incremental analysis is the same as CVP analysis. 
C) Incremental analysis is useful in making decisions. 
D) Incremental analysis focuses on decisions that involve a choice among alternative courses of action. 
A) Incremental analysis might also be referred to as differential analysis. 
B) Incremental analysis is the same as CVP analysis. 
C) Incremental analysis is useful in making decisions. 
D) Incremental analysis focuses on decisions that involve a choice among alternative courses of action.

Question 19

If a company must expand capacity to accept a special order it is likely that there will be

Accepted Answer

A) an increase in unit variable costs. 
B) no increase in fixed costs. 
C) an increase in variable and fixed costs per unit. 
D) an increase in fixed costs. 
A) an increase in unit variable costs. 
B) no increase in fixed costs. 
C) an increase in variable and fixed costs per unit. 
D) an increase in fixed costs.

Question 20

Book value of old equipment is considered to be a

Accepted Answer

A) relevant cost. 
B) semi-relevant cost. 
C) sunk cost. 
D) cost that can be changed by a present or future decision. 
A) relevant cost. 
B) semi-relevant cost. 
C) sunk cost. 
D) cost that can be changed by a present or future decision.

Canosta Inc.determined that it must expand its capacity to accept a special order.Which situation is likely?

Costs that will differ between alternatives and influence the outcome of a decision are

Which decision will involve no incremental revenues?

Many of the decisions involving incremental analysis have qualitative features but since they are not easily measured they should be ignored.

Incremental analysis is most useful

An opportunity cost is the potential benefit obtained by using resources in an alternative course of action.

What will most likely occur if a company eliminates an unprofitable segment when a portion of fixed costs are unavoidable?

Incremental analysis would not be appropriate for

In a make-or-buy decision opportunity costs are

A company is considering eliminating a product line.The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance.If the product line is discontinued

The process of evaluating financial data that change under alternative courses of action is called

A revenue that differs between alternatives and makes a difference in decision-making is called a(n)

All of the following are relevant in deciding whether to eliminate an unprofitable segment except the segment's

A decision whether to continue to make a product or buy it externally depends on the external price and the amount of variable and fixed costs that can be eliminated assuming no alternative uses of resources.

The elimination of an unprofitable product line may adversely affect the remaining product lines.

Accountants are mainly involved in developing nonfinancial information for management's consideration in choosing among alternatives.

Which of the following is not a true statement?

If a company must expand capacity to accept a special order it is likely that there will be

Book value of old equipment is considered to be a

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 13: Budgetary Control and Responsibility Accounting

Canosta Inc.determined that it must expand its capacity to accept a special order.Which situation is likely?

Costs that will differ between alternatives and influence the outcome of a decision are

Which decision will involve no incremental revenues?

Many of the decisions involving incremental analysis have qualitative features but since they are not easily measured they should be ignored.

Incremental analysis is most useful

An opportunity cost is the potential benefit obtained by using resources in an alternative course of action.

What will most likely occur if a company eliminates an unprofitable segment when a portion of fixed costs are unavoidable?

Incremental analysis would not be appropriate for

In a make-or-buy decision opportunity costs are

A company is considering eliminating a product line.The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance.If the product line is discontinued

The process of evaluating financial data that change under alternative courses of action is called

A revenue that differs between alternatives and makes a difference in decision-making is called a(n)

All of the following are relevant in deciding whether to eliminate an unprofitable segment except the segment's

A decision whether to continue to make a product or buy it externally depends on the external price and the amount of variable and fixed costs that can be eliminated assuming no alternative uses of resources.

The elimination of an unprofitable product line may adversely affect the remaining product lines.

Accountants are mainly involved in developing nonfinancial information for management's consideration in choosing among alternatives.

Which of the following is not a true statement?

If a company must expand capacity to accept a special order it is likely that there will be

Book value of old equipment is considered to be a

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters