M/C

When making a decision, only. costs and benefits should be included in the analysis. O opportunity O irrelevant O relevant O unavoidable

Relevant

When planning a trip and deciding to drive your car or take the train, gasoline is a(n)___cost. O relevant O irrelevant O sunk

Relevant

When planning a trip and making a decision to drive or take the train, the cost of car repairs and maintenance is a(n)____cost. O sunk O irrelevant O opportunity O relevant

Relevant

Deciding what to do with a joint product at the split-off point is a____decision. O special order O product line O make or buy (outsource) O sell or process further

Sell or process for

When making a decision, qualitative differences between alternatives____be ignored. O should not O may or may not O should

Should not

Allocated common costs are avoidable and/or relevant to a decision. O always O sometimes O never

Sometimes

When making a decision, irrelevant items are included in the analysis of both alternatives when using O the total cost approach only O neither the differential nor total cost approach O both the differential and total cost approaches O the differential cost approach only

The total cost approach only

The total cost approach and the differential approach methods of decision analvsis provide the same correct answer. O may or may not O will always O will never

Will always

Which of the following can make a product line-look less profitable than it really is? O Allocated common fixed costs O Common variable costs

Allocated common fixed costs

Opportunity costs should ____ be included in a make or buy analysis. O alwavs O never O sometimes

Always

If, by dropping a product line, a company cannot avoid as much in fixed costs as it loses in contribution margin, the company should _____product line. O keep O drop

Keep

A cost that can be eliminated in whole or in part by choosing one alternative over another is a(n)____ cost. O irrelevant O incremental O sunk O avoidable

Avoidable

The machine or process that is limiting overall output is a(n) O contribution margin per unit of the constrained resource O opportunity cost O bottleneck O irrelevant cost

Bottleneck

When a constraint exists, companies need to focus on maximizing O net sales O contribution margin per unit O contribution margin per unit of constraint O net income from sales

Contribution margin for unit of constraint

If some products must be cut back because of a constraint, produce the products with the highest O contribution margin per unit of constrained resource O contribution margin per unit of product O net operating income per unit

Contribution margin per unit of constrained resource

The first step in decision making is to O identify relevant costs and benefits O perform a differential analysis O define the alternatives

Define the alternatives

Focusing on future costs and benefits that are not the same between the choices is O the total cost approach O differential analysis O defining the alternatives O irrelevant cost analysis

Differential analysis

The key to effective decision making is____ O knowing there are at least two alternatives O considering opportunity costs O differential analysis

Differential analysis

Which of the following is an advantage of buying a part instead of making it? O Companies can control quality better by purchasing from a supplier. O Buying from suppliers ensures a smoother flow of parts and materials. O Companies can realize profits from the parts and materials that it makes in addition to profits from its regular operations O Economies of scale can result in higher quality and lower costs from suppliers.

Economies of scale can result in higher quality and lower costs from suppliers

A business segment should only be dropped if a company can save more in____costs than it loses in contribution margin. O mixed O product O variable Reason: Variable fixed costs are included in the contribution margin O fixed

Fixed

To maximize total contribution margin when a constrained resource exists, produce the products with the O lowest contribution margin per unit of the constrained resource O highest contribution margin per unit of the constrained resource O highest unit contribution margin O lowest unit contribution margin

Highest contribution margin per unit of the constrain resource

As it applies to sell or process further decisions, which term refers to a product that is in the process of being made? O Joint product O Joint cost O Intermediate product O Opportunity cost

Intermediate product

Future costs and benefits that do not differ between alternatives are_____costs to the decision-making process. O sunk O relevant O irrelevant O opportunity

Irrelevant

When deciding whether to drive your car or take a train to a destination, the costs for your car insurance and driver's license are____costs. O relevant O irrelevant O avoidable

Irrelevant

In order to prevent confusion and keep attention focused on critical information, it is desirable to O combine relevant and irrelevant costs to obtain a total cost O ignore relevant costs and focus on irrelevant one O isolate relevant costs from irrelevant costs

Isolate relevant costs from irrelevant costs

The present trend appears to be towards vertical integration. O more O no change in O less

Less

A decision to carry out one of the activities in the value chain internally rather than to purchase externally from a supplier is a____decision. O sell or process O make or buy O product line O special order

Make or buy

Differential costs and benefits that should be considered in a decision O are alwavs quantitative O may be qualitative or quantitative O are always qualitative

May be qualitative or quantitative

If a cost is traced to a segment using activity-based costing, it____an avoidable cost of the segment. O is never O is always O may or may not be

May or may not be

Joint costs incurred prior to the split-off point are______relevant in decisions regarding what to do from the split-off point forward. O always O sometimes O never

Never

Allocated common costs are____ O never relevant to decisions O always relevant to decisions O only relevant to decisions if they are avoidable O only relevant to decisions if they are unavoidable

Only roll into decisions if they are avoidable

The potential benefit given up when selecting one alternative over another is a(n)___cost. O irrelevant O sunk O opportunity O avoidable

Opportunity

When planning a road trip, the____is a sunk cost and should be ignored. O cost of parking at the motel where one will be staying O cost of gasoline for the trip O cost of car repairs and maintenance O original cost of the car

Original cost of the car

The costs provided by a well-designed activity-based costing system are____relevant to a decision. O potentially O not ever O always

Potentially

Costs and benefits that always differ between alternatives are_____costs and benefits. O sunk O variable O irrelevant O relevant

Relevant

Differential revenue is an example of a(n) benefit. O sunk O relevant O irrelevant O avoidable

Relevant

Costs that have no impact on future cash flows and are irrelevant to decisions are costs. O avoidable O sunk O marginal O unavoidable

Sunk

A special order should be accepted O when the incremental costs from the special order exceeds the incremental revenue of the order O when the incremental revenue from the special order exceeds the incremental costs of the order O almost always, because it means more business and will keep the employees productive

when the incremental revenue from the special order exceeds the incremental costs of the order

A joint product should be processed after split-off if the O revenue after additional processing exceeds the revenue at the split-off point O total revenue exceeds the total incremental and allocated common costs O incremental revenue after split-off exceeds the incremental processing cost after split-off

incremental revenue after split-off exceeds the incremental processing cost after split-off

When making a decision, only relevant items are included in the analysis of the alternatives when using O the total cost approach only O the differential cost approach only O both the differential and total cost approaches O neither the differential nor total cost approach

the differential cost approach only