A306 Chp.6

Which of the following should not be included in the analysis when making a decision?

Sunk costs Non-differential future costs

When making a decision to either buy a movie ticket or rent a DVD, the cost of the movie ticket is an example of a(n) ______ cost. avoidable sunk incremental irrelevant

avoidable incremental

Costs and benefits that always differ between alternatives are ______ costs and benefits.

relevant

If a company is using a resource that could be used for some other purpose, the opportunity cost of that resource is:

the profit from the best alternative use of the resource

When considering accepting a special order:

there must be idle capacity normal sales must not be affected

True or false: Depreciation of existing assets is relevant to decisions.

False

The key to effective decision making is:

differential analysis

Irrelevant costs include:

future costs that do not differ between alternatives sunk costs

To maximize total contribution margin when a constrained resource exists, produce the products with the:

highest contribution margin per unit of the constrained resource