Accounting Topic 12

Which ONE of the following BEST describes an opportunity cost? A cost requiring a direct outlay of cash A cost that does not change as the result of a decision A cost that is directly charged to expense in the income statement A cost that is specifically traceable to segment being analyzed A cost representing the loss of benefits from selecting a course of action

A cost representing the loss of benefits from selecting a course of action

Which ONE of the following BEST describes a DIRECT cost? A cost that does not change as the result of a decision A cost that is directly charged to expense in the income statement A cost representing the loss of benefits from selecting a course of action A cost that is specifically traceable to an order or business segment being analyzed A cost requiring a direct outlay of cash

A cost that is specifically traceable to an order or business segment being analyzed

Which ONE of the following is the most CORRECT description of an "OPPORTUNITY COST"? Variable costs only Budgeted costs Fixed costs only Foregone revenues Direct labor plus direct materials

Foregone revenues

Which ONE of the following is the most CORRECT definition of "DIFFERENTIAL COST"? Predicted costs based on future input factors Past costs that are different from budgeted amounts Future costs that vary among decision alternatives Future costs that are common among all decision alternatives

Future costs that vary among decision alternatives

For students in good MBA programs, what is the LARGEST cost of getting a two-year full-time MBA degree? The cost of the books The lost salary for those two years The travel cost associated with internships and recruiting The cost of the special software and the laptop computer The cost of the tuition

The lost salary for those two years

Under which ONE of the following circumstances is cost an important input into determining selling price? When direct materials cost is high When products are specialized When direct labor cost is high When work-in-process inventory levels are low When costs are fixed

When products are specialized

for a cost to be a differential cost, it must be: a future cost a sunk cost recorded in the accounting records a future cost that changes

a future cost that changes

joint product costs are costs incurred before split off point irrelevant to decisions concerning processing incurred whether further processing is done or not all of the above

all of the above

which of the following qualitative factors should be considered in a make-or-buy decision? effect on regular supply ability to make high quality component employee condereation all of the above

all of the above

Future costs that change as a result of a decision are: sunk costs variable costs differential costs opportunity costs

differential costs

costs that can be eliminated in whole or in part by choosing one alternative over another are sunk costs variable costs differential costs opportunity costs

differential costs

when there is idle capacity, which costs are most likely to be irrelevant? incremental costs fixed costs variable costs opportunity costs

fixed costs

In making a decision about whether or not to fill a special order, fixed costs that are incurred regardless of whether the order is accepted should be considered because they help reduce net income be considered because they cant be avoided not be considered because they will be incurred whether or not the order is accepted

not be considered because they will be incurred whether or not the order is accepted

costs that are significant in the decision-making process but are not recorded in the accounting records are: opportunity costs differential costs sunk costs overhead costs

opportunity costs

the maximum available contributions to profit that have been passed up by using resources for another purpose are sunk costs variable costs differential costs opportunity costs

opportunity costs

Costs that have already been incurred and cannot be avoided are sunk costs variable costs differential costs opportunity costs

sunk costs

costs that are never relevant to a decision because they are always the same are: sunk costs variable costs differential costs opportunity costs

sunk costs

evening theater tickets are probably more expensive than matinee tickets because variable costs of a matinee are lower than those of an evening performance theaters are trying to use up excess capacity and so are considering only incremental costs in determining the price of a matinee less electricity in the daytime

theaters are trying to use up excess capacity and so are considering only incremental costs in determining the price of a matinee

which of the following statements about opportunity costs is true they are not recorded in the accounts and are not useful in the decision making process they are not recorded in the accounts but are useful in the decision making process they are recorded but not useful they are recorded and useful

they are not recorded in the accounts but are useful in the decision making process

when pricing special orders, management can often approximate additional costs by the sunk costs of making the product total costs of making the product fixed costs of making the product variable costs of making the product

variable costs of making the product

under what circumstance will it be profitable to continue processing after split off point when incremental revenues exceed incremental processing costs after split off point no additional sunk costs opportunity costs outweigh differential costs none of the above

when incremental revenues exceed incremental processing costs after split off point