CH 8
Fixed costs that will continue to exist if a product is discontinued are relevant. T/F
F
When deciding whether to discontinue a product, managers should only consider the costs that will be saved. T/F
F
Managers' decisions are based solely on quantitative factors. T/F
F
If a product has a negative contribution margin, it should not be discontinued. T/F
F, it should
Expected future data that differs among alternative courses of action are referred to as
Relevant info
In a special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be
Relevant to decision
If the expected increase in revenues from a special order is greater than the expected increase in variable and fixed costs, then the special order should be accepted T/F
T
Managers should consider the potential effect of a special order on long-run profits and operations T/F
T
One cost that is irrelevant in decision making is a sunk cost. T/F
T
When deciding whether to accept a special order, managers need to consider whether they have available excess capacity. T/F
T
Common fixed costs that are allocated between departments are generally
irrelevant to the decision of whether to discontinue the department.
Costs that differ between alternatives are irrelevant. T/F
F
Which of the following best describes a "sunk cost"? A. Expected future data that differ among alternatives B. Costs that were incurred in the past and cannot be changed C. Benefits foregone by choosing a particular alternative course of action D. A factor that restricts the production or sale of a product
B
Fixed costs that are allocated among all departments are known as
Common fixed costs
Managers should consider all of the following when deciding whether to accept a special order, except A. the effect of the order on regular sales. B. the variable costs associated with the special order. C. available excess capacity. D. fixed costs that will not be affected by the order.
D
Which of the following is irrelevant when making a decision? A. The expected increase in contribution margin of one product line as a result of a decision to discontinue a separate unprofitable product line B. The cost of further processing a product that could be sold as is C. Fixed overhead costs that differ among alternatives D. The cost of an asset that the company is considering replacing
D
Which would be a consideration for making special orders? A. Available capacity to fill the order B. If price will cover incremental costs of filling the order C. If the order will affect regular sales in the long run D. All of the above
D
A manager should always reject a special order if
the special order price is less than the variable costs of the order.
