Question 1

Variable costs will always change between alternatives.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 2 and 3 
A) 1 
B) 2 
C) 3 
D) 2 and 3

Question 2

The cash disposal value of old equipment is considered to be a (an)

Accepted Answer

A) irrelevant cost. 
B) avoidable cost. 
C) sunk cost. 
D) relevant cost. 
A) irrelevant cost. 
B) avoidable cost. 
C) sunk cost. 
D) relevant cost.

Question 3

If a company has excess capacity and present markets will not be affected it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.

Accepted Answer

A) True 
 B)False

Question 4

In a sell or process further decision management should process further as long as the incremental revenues from additional processing exceed the incremental variable costs.

Accepted Answer

A) True 
 B)False

Question 5

The process used to identify the financial data that change under alternative courses of action is called allocation of limited resources.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would generally not affect a make-or-buy decision?

Accepted Answer

A) Selling expenses 
B) Direct labor 
C) Variable manufacturing costs 
D) Opportunity cost 
A) Selling expenses 
B) Direct labor 
C) Variable manufacturing costs 
D) Opportunity cost

Question 7

When will the elimination of a product line have no effect on the company's overall profit?

Accepted Answer

A) When the avoidable fixed costs equal the product line's contribution margin 
B) When the unavoidable fixed costs equal the product line's contribution margin 
C) When there are no fixed costs incurred by the product line 
D) When the product line contribution margin is negative 
A) When the avoidable fixed costs equal the product line's contribution margin 
B) When the unavoidable fixed costs equal the product line's contribution margin 
C) When there are no fixed costs incurred by the product line 
D) When the product line contribution margin is negative

Question 8

What is the relevant cost per unit of part A12E?

Accepted Answer

A) $58 
B) $85 
C) $93 
D) $66 
A) $58 
B) $85 
C) $93 
D) $66

Question 9

North Division has the following information: $$\begin{array} { l r } 
\text { Sales } & \$ 1,200,000 \
\text { Variable expenses } & 640,000 \
\text { Fixed expenses } & 620,000
\end{array}$$ If this division is eliminated the fixed expenses will be allocated to the company's other divisions.What is the incremental effect on net income if the division is dropped?

Accepted Answer

A) $60000 increase 
B) $620000 decrease 
C) $560000 decrease 
D) $580000 increase 
A) $60000 increase 
B) $620000 decrease 
C) $560000 decrease 
D) $580000 increase

Question 10

Accounting's contribution to the decision-making process occurs in all of the following steps except to

Accepted Answer

A) identify the problem and assign responsibility. 
B) determine possible courses of action. 
C) review results of the decision. 
D) make a decision. 
A) identify the problem and assign responsibility. 
B) determine possible courses of action. 
C) review results of the decision. 
D) make a decision.

Question 11

In incremental analysis

Accepted Answer

A) only costs are analyzed. 
B) only revenues are analyzed. 
C) both costs and revenues may be analyzed. 
D) both costs and revenues that stay the same between alternate courses of action will be analyzed. 
A) only costs are analyzed. 
B) only revenues are analyzed. 
C) both costs and revenues may be analyzed. 
D) both costs and revenues that stay the same between alternate courses of action will be analyzed.

Question 12

In incremental analysis

Accepted Answer

A) costs are not relevant if they change between alternatives. 
B) all costs are relevant if they change between alternatives. 
C) only fixed costs are relevant. 
D) only variable costs are relevant. 
A) costs are not relevant if they change between alternatives. 
B) all costs are relevant if they change between alternatives. 
C) only fixed costs are relevant. 
D) only variable costs are relevant.

Question 13

Relevant costs are always

Accepted Answer

A) fixed costs. 
B) variable costs. 
C) avoidable costs. 
D) sunk costs. 
A) fixed costs. 
B) variable costs. 
C) avoidable costs. 
D) sunk costs.

Question 14

In incremental analysis total variable costs will always change under alternative courses of action and total fixed costs will always remain constant.

Accepted Answer

A) True 
 B)False

Question 15

From a quantitative standpoint a segment should be eliminated if its contribution margin is less than the fixed costs that can be eliminated.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following will always be a relevant cost?

Accepted Answer

A) Sunk cost 
B) Fixed cost 
C) Variable cost 
D) Opportunity cost 
A) Sunk cost 
B) Fixed cost 
C) Variable cost 
D) Opportunity cost

Question 17

Mallory Company manufactures widgets.Bowden Company has approached Mallory with a proposal to sell the company widgets at a price of $82000 for 100000 units.Mallory is currently making these components in its own factory.The following costs are associated with this part of the process when 100000 units are produced: $$\begin{array} { l r } 
\text { Direct material } & \$ 31,000 \
\text { Direct labor } & 29,000 \
\text { Manufacturing overhead } & 40,000 \
 \text { Total } & \$ 100,000 \
\hline
\end{array}$$ The manufacturing overhead consists of $16000 of costs that will be eliminated if the components are no longer produced by Mallory.From Mallory's point of view how much is the incremental cost or savings if the widgets are bought instead of made?

Accepted Answer

A) $18000 incremental savings 
B) $6000 incremental cost 
C) $2000 incremental savings 
D) $18000 incremental cost 
A) $18000 incremental savings 
B) $6000 incremental cost 
C) $2000 incremental savings 
D) $18000 incremental cost

Question 18

The potential effects of the decision to eliminate a line of business on existing employees and the community are

Accepted Answer

A) ignored in incremental analysis. 
B) quantitative factors. 
C) qualitative factors. 
D) opportunity costs. 
A) ignored in incremental analysis. 
B) quantitative factors. 
C) qualitative factors. 
D) opportunity costs.

Question 19

The source of data to serve as inputs in incremental analysis is generated by

Accepted Answer

A) market analysts. 
B) engineers. 
C) accountants. 
D) All of these answers are correct. 
A) market analysts. 
B) engineers. 
C) accountants. 
D) All of these answers are correct.

Question 20

Decision-making involves choosing among alternative courses of action.

Accepted Answer

A) True 
 B)False

Variable costs will always change between alternatives.

The cash disposal value of old equipment is considered to be a (an)

If a company has excess capacity and present markets will not be affected it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.

In a sell or process further decision management should process further as long as the incremental revenues from additional processing exceed the incremental variable costs.

The process used to identify the financial data that change under alternative courses of action is called allocation of limited resources.

Which of the following would generally not affect a make-or-buy decision?

When will the elimination of a product line have no effect on the company's overall profit?

What is the relevant cost per unit of part A12E?

North Division has the following information: Sales \ 1,200,000 Variable expenses 640,000 Fixed expenses 620,000 If this division is eliminated the fixed expenses will be allocated to the company's other divisions.What is the incremental effect on net income if the division is dropped?

Accounting's contribution to the decision-making process occurs in all of the following steps except to

In incremental analysis

In incremental analysis

Relevant costs are always

In incremental analysis total variable costs will always change under alternative courses of action and total fixed costs will always remain constant.

From a quantitative standpoint a segment should be eliminated if its contribution margin is less than the fixed costs that can be eliminated.

Which of the following will always be a relevant cost?

The potential effects of the decision to eliminate a line of business on existing employees and the community are

The source of data to serve as inputs in incremental analysis is generated by

Decision-making involves choosing among alternative courses of action.

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

Variable costs will always change between alternatives.

The cash disposal value of old equipment is considered to be a (an)

If a company has excess capacity and present markets will not be affected it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.

In a sell or process further decision management should process further as long as the incremental revenues from additional processing exceed the incremental variable costs.

The process used to identify the financial data that change under alternative courses of action is called allocation of limited resources.

Which of the following would generally not affect a make-or-buy decision?

When will the elimination of a product line have no effect on the company's overall profit?

What is the relevant cost per unit of part A12E?

North Division has the following information: Sales \ 1,200,000 Variable expenses 640,000 Fixed expenses 620,000 If this division is eliminated the fixed expenses will be allocated to the company's other divisions.What is the incremental effect on net income if the division is dropped?

Accounting's contribution to the decision-making process occurs in all of the following steps except to

In incremental analysis

In incremental analysis

Relevant costs are always

In incremental analysis total variable costs will always change under alternative courses of action and total fixed costs will always remain constant.

From a quantitative standpoint a segment should be eliminated if its contribution margin is less than the fixed costs that can be eliminated.

Which of the following will always be a relevant cost?

The potential effects of the decision to eliminate a line of business on existing employees and the community are

The source of data to serve as inputs in incremental analysis is generated by

Decision-making involves choosing among alternative courses of action.

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