Accounting Exam 2 ch. 12

d. relevant

Cost and benefits that ALWAYS differ between alternatives are ___ costs and benefits. a. variable b. irrelevant c. sunk d. relevant

differential cost

When considering decision alternatives, only relevant costs are included when using the ____ approach.

b. are not

Joint costs incurred prior to the split-off point ___ relevant in decisions regarding what to do from the split-off point forward. a. are b. are not

a. avoidable b. incremental

Synonyms for differential costs include ___ cost. (Select all that apply) a. avoidable b. incremental c. irrelevant d. sunk

a. make or buy

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

false

An avoidable cost is a sunk cost that can be eliminated (in whole or in part) as a result of choosing one alternative over another. true/false

a. may o may not be an avoidable cost of the segment

If a cost is traced to a segment using activity-based costing, it: a. may o may not be an avoidable cost of the segment b. is always an avoidable cost of the segment c. is never an avoidable cost of the segment

c. irrelevant in decisions regarding what to do with a product after split-off

Joint costs are: a. economically attributable to all end products b. increased or decreased after the split-off point c. irrelevant in decisions regarding what to do with a product after split-off d. common costs that must be allocated to make decisions about the individual products

false

Variable costs are always relevant costs in decisions. true/false

c. split-off point

What is the point in the manufacturing process at which joint products can be recognized as separate products? a. opportunity point b. make or buy point c. split-off point d. intermediate point

vertically integrated

When a company is involved in more than one activity in the entire value chain, it is ____.

true

When a company is involved in more than one activity in the entire value chain, it is vertically integrated. true/false

c. irrelevant costs

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: a. avoidable costs b. relevant costs c. irrelevant costs

a. it is profitable when the incremental revenue exceeds the incremental procession cost

When is it profitable to continue processing a joint product after the split-off point? a. it is profitable when the incremental revenue exceeds the incremental procession cost b. it is never profitable c. it is profitable when the incremental processing cost exceeds the incremental revenue d. it is always profitable

c. avoidable d. relevant

When making a decision to either go to a movie or rent a DVD, the cost of the movie ticket is an example of a ___ cost. (Select all that apply) a. sunk b. incremental c. avoidable d. relevant

c. original cost of the car

When planning a trip and deciding whether to drive or fly, the ___ is a sunk cost and should be ignored. a. monthly parking fee that must be paid at your apartment while you're gone b. cost of car repairs and maintenance c. original cost of the car d. cost of gasoline for the trip

a. allocated common fixed costs

Which of the following can make a product line look less profitable than it really is? a. allocated common fixed costs b. common variable costs

avoidable

A cost that can be eliminated by choosing one alternative over another is a ___ cost.

d. avoidable

A cost that can be eliminated in whole or in part by choosing one alternative over another is a ___ cost. a. irrelevant b. sunk c. incremental d. avoidable

Constraint

Anything that prevents you from getting what you want is a ___.

a. sunk costs b. future costs that do not differ between alternatives

Irrelevant costs include: (Select all that apply) a. sunk costs b. future costs that do not differ between alternatives c. future costs that differ between alternatives d. all fixed costs

Opportunity

The potential benefit given up when selecting one alternative over another is a ___ cost.

Joint products

Two or more products that are produced from a common input are known as ____.

sunk

A cost that has already been incurred and cannot be avoided regardless of what a manager decides to do is referred to as a ___ cost.

special order

A one-time sale that is not considered part of the company's normal ongoing business is referred to as a ____ decision

sell, process further

Deciding what to do with a joint product at the split-off point is a ___ or ___ decision.

a. critical info may be overlooked with the total cost approach c. all info needed for the total cost approach is rarely available d. irrelevant costs may be used incorrectly in the analysis

Isolating relevant costs is desirable because: (Select all that apply) a. critical info may be overlooked with the total cost approach b. managers prefer to see all costs and benefits associated with a decision c. all info needed for the total cost approach is rarely available d. irrelevant costs may be used incorrectly in the analysis

b. vertical integration

Less dependance on suppliers is an advantage of: a. horizontal integration b. vertical integration c. special orders d. outsourcing

a. an overall increase in net operating income d. avoiding more fixed costs than the company loses in cm

Potential advantages of dropping a product line or other segment include: (Select all that apply) a. an overall increase in net operating income b. an overall decrease in other product line sales c. increasing relevant costs that the company incurs d. avoiding more fixed costs than the company loses in cm

a. the value chain

Set of activities ranging from development to production to after-sales service is called: a. the value chain b. a marketing strategy c. vertical integration

Opportunity

Space being used that would otherwise be idles has a ___ cost of zero.

a. define the alternatives

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