chapter 13
in a sell or process further decision, consider the following costs: 1. a variable production cost incurred prior to split off 2. a variable production cost incurred after split off 3. an avoidable fixed production cost incurred after split off. which of the above costs are not relevant in a decision regarding whether the product should be processed further? 1 and 3 1 3 1 and 2
1
T/F: avoidable costs are irrelevant cost in decisions
false
T/F: consistency demands that a cost that is relevant in one decision be regarded as relevant in other decisions as well
false
T/F: fixed costs are always sunk costs
false
T/F: it is profitable co continue processing joint products after the split off point if their total revenues exceed the joint costs
false
T/F: variable costs are always relevant costs in decisions
false
KLM company manufactures five different products. all five of these products must pass through a stamping machine in its fabrication department. this machine is the constrained resource. KLM would make the most profit if it produces the product that: generates the highest contribution margin ratio generates the highest contribution margin per unit uses the least amount of stamping time generates the highest contribution margin per stamping machine hour
generates the highest contribution margin per stamping machine hour
which of the following costs are always irrelevant in decision making? sunk costs avoidable costs opportunity costs fixed costs
sunk costs
T/F: fixed costs may be relevant in a decision
true
T/F: sunk costs are never relevant in decision making
true
T/F: the split off point in a process that produces joint products is the pain in the manufacturing process at which the joint products can be recognized as separate products
true
T/F: the term joint cost is used to describe the costs incurred up to the split off point in a process involving joint products
true
T/F: when a company has a production constraint, total contribution margin will be maximized by emphasizing the products with the highest contribution margin per unit of the contained resource
true
a cost that will be incurred regardless of which alternative is selected is not relevant when choosing between the alternatives
true