Accy 309 Test 3 Chapter 10

Which of the following costs would not be accounted for in a company's recordkeeping system? A. an unexpired cost B. an expired cost C. a product cost D. an opportunity cost

An opportunity Cost

An outside firm selected to provide services to an organization is called a A. contract vendor. B. lessee. C. network organization. D. centralized insourcer.

Contract Vendor

In evaluating the profitability of a specific organization segment, all _____ would be ignored.

Costs allocated to the segment

Costs forgone when an individual or organization chooses one option over another are A. budgeted costs B. sunk costs. C. historical costs. D. opportunity costs.

Opportunity Costs

The ____ prohibits companies from pricing products at different amounts unless these differences reflect differences in the cost to manufacture, sell, or distribute the products. A. Internal Revenue Service B. Governmental Accounting Office C. Sherman Antitrust Act D. Robinson-Patman Act

Robinson-Patman Act

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is A. the total manufacturing cost of the component. B. the total variable cost of the component. C. the fixed manufacturing cost of the component. D. zero.

Zero

In a make or buy decision, the reliability of a potential supplier is A. an irrelevant decision factor. B. relevant information if it can be quantified. C. an opportunity cost of continued production. D. a qualitative decision factor.

a qualitative decision factor

In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignore the A. estimated disposal value of the old machine. B. acquisition cost of the old machine. C. operating costs of the new machine. D. estimated disposal value of the new machine.

acquisition cost of the old machine

Which of the following is the least likely to be a relevant item in deciding whether to replace an old machine? A. acquisition cost of the old machine B. outlay to be made for the new machine C. annual savings to be enjoyed on the new machine D. life of the new machine

acquisition cost of the old machine

When a company discontinues a segment, total corporate costs may decrease in all of the following categories except A. variable production costs. B. allocated common costs. C. direct fixed costs. D. variable period costs.

allocated common costs

If a cost is irrelevant to a decision, the cost could not be A. a sunk cost. B. a future cost. C. a variable cost. D. an incremental cost.

an incremental cost

Relevant costs are A. all fixed and variable costs. B. all costs that would be incurred within the relevant range of production. C. past costs that are expected to be different in the future. D. anticipated future costs that will differ among various alternatives.

anticipated future costs that will differ among various alternatives

A fixed cost is relevant if it is A. uncontrollable. B. avoidable. C. sunk. D. a product cost.

avoidable

In a make or buy decision, the opportunity cost of capacity could A. be considered to decrease the price of units purchased from suppliers. B. be considered to decrease the cost of units manufactured by the company. C. be considered to increase the price of units purchased from suppliers D. not be considered since opportunity costs are not part of the accounting records.

be considered to decrease the price of units purchased from suppliers

An ad hoc sales discount is A. an allowance for an inferior quality of marketed goods. B. a discount that an ad hoc committee must decide on. C. brought about by competitive pressures. D. none of the above.

brought about by competitive pressures

Assume a company produces three products: A, B, and C. It can only sell up to 3,000 units of each product. Production capacity is unlimited. The company should produce the product (or products) that has (have) the highest A. contribution margin per hour of machine time. B. gross margin per unit. C. contribution margin per unit. D. sales price per unit.

contribution margin per unit

When a scarce resource, such as space, exists in an organization, the criterion that should be used to determine production is A. contribution margin per unit. B. selling price per unit. C. contribution margin per unit of scarce resource. D. total variable costs of production.

contribution margin per unit of scarce resource

Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle? A. direct labor B. equipment depreciation C. variable cost of utilities D. opportunity cost of production

equipment depreciation

Most ____ are relevant to decisions to acquire capacity, but not to short-run decisions involving the use of that capacity. A. sunk costs B. incremental costs C. fixed costs D. prime costs

fixed costs

A cost is sunk if it A. is not an incremental cost. B. is unavoidable. C. has already been incurred. D. is irrelevant to the decision at hand.

has already been incurred

Which of the following costs would be relevant in short-term decision making? A. incremental fixed costs B. all costs of inventory C. total variable costs that are the same in the considered alternatives D. the cost of a fixed asset that could be used in all the considered alternatives

incremental fixed costs

Which of the following qualitative factors favors the buy choice in a make or buy decision for a part? A. maintaining a long-term relationship with suppliers B. quality control is critical C. utilization of idle capacity D. part is critical to product

maintaining a long-term relationship with suppliers

Contracting with vendors outside the organization to obtain or acquire goods and/or services is called A. target costing. B. insourcing. C. outsourcing. D. product harvesting.

outsourcing

Which of the following activities within an organization would be least likely to be outsourced? A. accounting B. data processing C. transportation D. product design

product design

An increase in direct fixed costs could reduce all of the following except A. product line contribution margin. B. product line segment margin. C. product line operating income. D. corporate net income.

product line contribution margin

Which of the following is not a characteristic of relevant costing information?It is A. associated with the decision under consideration. B. significant to the decision maker. C. readily determined from financial records. D. related to a future endeavor.

readily determined from financial records

The potential rental value of space used for production activities A. is a variable cost of production. B. represents an opportunity cost of production. C. is an unavoidable cost. D. is a sunk cost of production.

represents an opportunity cost of production

A manager is attempting to determine whether a segment of the business should be eliminated. The focus of attention for this decision should be on A. the net income shown on the segment's income statement. B. sales minus total expenses of the segment. C. sales minus total direct expenses of the segment. D. sales minus total variable expenses and avoidable fixed expenses of the segment.

sales minus total variable expenses and avoidable fixed expenses of the segment.

The term incremental cost refers to A. the profit foregone by selecting one choice instead of another. B. the additional cost of producing or selling another product or service. C. a cost that continues to be incurred in the absence of activity. D. a cost common to all choices in question and not clearly or feasibly allocable to any of them.

the additional cost of producing or selling another product or service

For a particular product in high demand, a company decreases the sales price and increases the sales commission. These changes will not increase A. sales volume. B. total selling expenses for the product. C. the product contribution margin. D. the total variable cost per unit.

the product contribution margin

Fixed costs are ignored in allocating scarce resources because A. they are sunk. B. they are unaffected by the allocation of scarce resources. C. there are no fixed costs associated with scarce resources. D. fixed costs only apply to long-run decisions.

they are unaffected by the allocation of scarce resources

The minimum selling price that should be acceptable in a special order situation is equal to total A. production cost. B. variable production cost. C. variable costs and avoidable fixed costs. D. production cost plus a normal profit margin.

variable costs and avoidable fixed costs

Which of the following are relevant in a make or buy decision? Prime costs Sunk costs Incremental costs

yes no yes

Which of the following are relevant in a make or buy decision? Variable costs Avoidable fixed costs Unavoidable fixed costs

yes yes no

Irrelevant costs generally include..?

yes yes yes