CHP 7 T/F
Although important to managers, the solution to most business problems does not involve incremental analysis.
F
Fixed costs are (never) relevant and are (not) considered in decision making.
F
Fixed costs are always sunk costs and are therefore irrelevant.
F
In analyzing a decision to drop a product line, avoidable fixed costs often result in a cost allocation death spira
F
Incremental costs are also referred to as opportunity costs.
F
It is always in the best interest of a company to drop a product line that has net operating losses.
F
Joint costs are defined as two or more costs that are combined to make one product.
F
Opportunity costs are relevant, but are (not) considered in decision making.
F
Qualitative aspects of decision situations need not be considered (in decision making.)
F
Quantitative figures are the basis on which all make or buy decisions must be made.
F
Sunk costs are relevant in decision making.
F
Using the relative sales value method, the amount of joint cost allocated to products depends on the relative sales value of the products at the (final stage) of production.
F
An advantage of using an outside supplier is that the adverse effect of a downturn in business is less severe.
T
Fixed costs can be sunk and irrelevant, not sunk and irrelevant, or not sunk and relevant.
T
For financial reporting purposes, the cost of the common inputs must be allocated to the joint products.
T
In a make or buy decision, incremental revenue is not involved in the decision.
T
In analyzing a decision to drop a product line, UNavoidable fixed costs often result in a cost allocation death spira
T
Incremental costs are also referred to as relevant costs or differential costs.
T
Joint costs are not incremental to production of an individual joint product.
T
Joint costs are the costs of common inputs
T
Opportunity costs are relevant and (must) be considered in decision making.
T
Performance measures related to production volume such as units produced per hour can have a negative impact on shareholder value when they are applied to nonbottleneck departments.
T
Qualitative aspects of decision situations (must receive the same attention as quantitative components.)
T
Relevant costs are always avoidable.
T
Sunk costs are (never) relevant and are (not) considered in decision making.
T
The process of determining major activities occurs before the resources used by each activity are identified in performing an activity-based management study.
T
The solution to all business problems involves incremental analysis.
T
Using the relative sales value method, the amount of joint cost allocated to products depends on the relative sales value of the products at the (split-off point.)
T