Accounting Quiz 6

Rica company is a price-taker and uses a target-pricing approach. Refer to the following information

$2,085,000

Fine arts inc. produces a special kind of light weight, recreational vehicle that has a unique design.

$3,100

A company has two different products that are sold in different markets.

Increases by $300

_______ refer to the value forgone in order to make one particular investment instead of another.

Opportunity costs

Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available

The original cost of the old machine

Which of the following is a major consideration when analyzing a special order?

The price must be high enough to cover any incremental costs to fill the order

Fixed costs that do not differ between two alternatives are

considered irrelevant to the decision

Which of the following is one of the keys to short-term business decision making?

focus on relevant costs and use the contribution margin approach.

When replacing an old asset with a new one, the original purchase price of the old asset

sunk cost

Which of the following is a historical cost that is always irrelevant

sunk cost

Healthier living company manufactures two products -toaster ovens and bread machines.

$7,200 ?

Fantabulous Productions sells 2000 kayaks a year at a price of $450 per year.

$720,000

Which of the following statements is true of short-term decision making?

Fixed costs and variable costs must be analyzed separately

Valuable Electronics uses a standard part in the manufacturers of different types of radios manufactured by it. The total cost of producing 25,000 parts is $95,000, which includes fixed cost of $40,000 and variable costs of $55,000.

Increase of $3,000

The contribution margin approach helps managers in short-term decision making because

It reports costs and revenues at present value

Fazos Hats Inc. has two product lines - baseball helmets and football helmets.

Operating Income will decrease by $70,000

CM manufacturing has provided the following unit costs pertaining to a component they manufacture and use in the production of one of their main products

Operating income would go down by $10,000

Which of the following phrases most accurately describes opportunity cost?

The benefit given up by not choosing an alternative course of action

Shasta company is trying to decide whether to continue to manufacture a particular component or buy the component from an outside supplier. Which of the following is.....

The quality of the equipment/component purchased from the outside supplier

A chemical company spent $330,000 to produce 150,000....

the company decides to produce ????? operating income by $30,000