SB chap 6 accounting
Differential revenue is an example of a(n) Blank______ benefit. Multiple choice question. avoidable sunk relevant irrelevant
relevant
What type of cost is never relevant and should be disregarded when making decisions? Multiple choice question. Opportunity Sunk Marginal Incremental
sunk
When demand for products exceeds the production capacity, a Blank______ decision must be made. Multiple choice question. volume trade-off sell or process sourcing product line
volume trade-off
If a company is using a resource that could be used for some other purpose, the opportunity cost of that resource is Blank______. Multiple choice question. the profit from the current use of the resource the profit from the best alternative use of the resource zero
the profit from the best alternative use of the resource
A company is considering buying a component part that they currently make. Items related to the equipment being used to make the component that are relevant to this decision include Blank______. Multiple select question. annual depreciation charges original cost salvage value alternative uses for the equipment
salvage value alternative uses for the equipment
When making a decision, only relevant items are included in the analysis of the alternatives when using Blank______. Multiple choice question. the total cost approach only both the differential and total cost approaches neither the differential nor total cost approach the differential cost approach only
the differential cost approach only
When making a decision, irrelevant items are included in the analysis of both alternatives when using Blank______. Multiple choice question. both the differential and total cost approaches the total cost approach only neither the differential nor total cost approach the differential cost approach only
the total cost approach only
Isolating relevant costs is desirable because Blank______. Multiple select question critical information may be overlooked with the total cost approach managers prefer to see all costs and benefits associated with a decision all information needed for the total cost approach is rarely available irrelevant costs may be used incorrectly in the analysis
critical information may be overlooked with the total cost approach all information needed for the total cost approach is rarely available irrelevant costs may be used incorrectly in the analysis
The first step in decision making is to Blank______. Multiple choice question. define the alternatives perform a differential analysis identify relevant costs and benefits
define the alternatives
To maximize total contribution margin when a constrained resource exists, produce the products with the Blank______. Multiple choice question. highest contribution margin per unit of the constrained resource highest unit contribution margin lowest unit contribution margin lowest contribution margin per unit of the constrained resource
highest contribution margin per unit of the constrained resource !per unit is important to specify!)
Focusing on future costs and benefits that are not the same between the choices is Blank______. Multiple choice question. the total cost approach differential analysis defining the alternatives irrelevant cost analysis
differential analysis
The key to effective decision making is Blank______. Multiple choice question. differential analysis knowing there are at least two alternatives considering opportunity costs
differential analysis
Opportunity costs are not found in accounting records because they are not relevant to decisions. True false question.TrueFalse
false
When considering decision alternatives, both relevant and irrelevant costs are included when using the__________________________________ cost approach.
total
When a constraint exists, companies need to focus on maximizing Blank______. Multiple choice question. net income from sales total contribution margin net sales
total contribution margin