_____________ is a costmanagement technique in which the firm determines the required costfor a product or service in order to earn a desired profit when themarketplace establishes the product's selling price.
A. Relevant costing
B. Product costing
C. Differential costing
D. Target costing
______________ can bemeasured as the income that could have been earned on an asset,based on the potential rate of return that is lost or sacrificedwhen one alternative use of the asset is chosen over another.
A. Target cost
B. Sunk cost
C. Opportunity cost
D. Allocated cost
_____________ costsbetween two alternative projects are those that would result fromselecting one alternative instead of the other.
A. Allocated
B. Differential
C. Sunk
D. Irrelevant
Which of the followingcost classifications would not be considered relevant in comparingdecision alternatives?
A. Opportunity cost.
B. Differential cost.
C. Sunk cost.
D. None of the above.
In considering whether toaccept a special order at a price less than the normal sellingprice of the product and where the additional sales will make useof present idle capacity, which of the following costs will not berelevant?
A. Direct labor.
B. Direct materials.
C. Variable manufacturing overhead.
D. Fixed manufacturing overhead that cannot be avoided.
A cost classified "fordecision making purposes" would include:
A. period cost.
B. opportunity cost.
C. controllable cost.
D. inventoriable cost.
Relevant costs indecision-making:
A. are future costs that represent differences between decisionalternatives.
B. result from past decisions.
C. should not influence the decision.
D. none of the above.
A cost is consideredrelevant if:
A. it is positive.
B. it is sunk.
C. it makes a difference.
D. it can't be changed.
If a cost is irrelevant toa decision, the cost could not be a:
A. fixed cost.
B. sunk cost.
C. differential cost.
D. variable cost.
The potential rental valueof space used in the manufacturing process:
A. is a variable production cost.
B. is an unavoidable production cost.
C. is a sunk production cost.
D. is an opportunity cost if production is notoutsourced.
_____________ is a costmanagement technique in which the firm determines the required costfor a product or service in order to earn a desired profit when themarketplace establishes the product's selling price.
A. Relevant costing
B. Product costing
C. Differential costing
D. Target costing
______________ can bemeasured as the income that could have been earned on an asset,based on the potential rate of return that is lost or sacrificedwhen one alternative use of the asset is chosen over another.
A. Target cost
B. Sunk cost
C. Opportunity cost
D. Allocated cost
_____________ costsbetween two alternative projects are those that would result fromselecting one alternative instead of the other.
A. Allocated
B. Differential
C. Sunk
D. Irrelevant
Which of the followingcost classifications would not be considered relevant in comparingdecision alternatives?
A. Opportunity cost.
B. Differential cost.
C. Sunk cost.
D. None of the above.
In considering whether toaccept a special order at a price less than the normal sellingprice of the product and where the additional sales will make useof present idle capacity, which of the following costs will not berelevant?
A. Direct labor.
B. Direct materials.
C. Variable manufacturing overhead.
D. Fixed manufacturing overhead that cannot be avoided.
A cost classified "fordecision making purposes" would include:
A. period cost.
B. opportunity cost.
C. controllable cost.
D. inventoriable cost.
Relevant costs indecision-making:
A. are future costs that represent differences between decisionalternatives.
B. result from past decisions.
C. should not influence the decision.
D. none of the above.
A cost is consideredrelevant if:
A. it is positive.
B. it is sunk.
C. it makes a difference.
D. it can't be changed.
If a cost is irrelevant toa decision, the cost could not be a:
A. fixed cost.
B. sunk cost.
C. differential cost.
D. variable cost.
The potential rental valueof space used in the manufacturing process:
A. is a variable production cost.
B. is an unavoidable production cost.
C. is a sunk production cost.
D. is an opportunity cost if production is notoutsourced.
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Related questions
| MULTIPLE CHOICE: 1. Which of the following is never considered in incrementalanalysis? A. Incremental revenue B. Sunk costs C. Incremental profit D. Differential costs |
| 2. When deciding between two alternatives, the preferredalternative always has: A. No opportunity costs B. Greater revenues than the other alternatives C. Less expense than the other alternatives D. Greater incremental profit than the other alternatives |
| 3. A company is trying to decide whether to keep or drop thesporting goods department in its department store. If the segmentis dropped, the manager will be fired. The managerâs salary, inrelation to the decision ti keep or drop the sporting department,is: A. Avoidable and therefore relevant B. Not avoidable and therefore relevant C. Sunk and therefore not relevant D. The same for all alternatives and therefore not relevant |
| 4. A product line should be dropped when: A. It has a negative contribution margin B. Its avoidable fixed cost are greater than its contributionmargin C. There will be a positive change in income if the product lineis dropped D. All of above |
| 5. Joint cost are: A. The cost of the common inputs for joint products B. Greater when there are more joint products C. Unnecessary if the accounting system is moresophisticated D. Only used when there are no opportunity costs involved in thedecision |
Holtrop Corporation has received a request for a special orderof 9,400 units of product Z74 for $46.90 each. The normal sellingprice of this product is $52.00 each, but the units would need tobe modified slightly for the customer. The normal unit product costof product Z74 is computed as follows: |
| Directmaterials | $17.70 |
| Direct labor | 7.00 |
| Variablemanufacturing overhead | 4.20 |
| Fixed manufacturingoverhead | 7.10 |
| Unit productcost | $36.00 |
Direct labor is a variable cost. The special order would have noeffect on the company's total fixed manufacturing overhead costs.The customer would like some modifications made to product Z74 thatwould increase the variable costs by $6.60 per unit and that wouldrequire a one-time investment of $46,400 in special molds thatwould have no salvage value. This special order would have noeffect on the company's other sales. The company has ample sparecapacity for producing the special order. |
| Required: |
Determine the effect on the company's the incremental netoperating income of accepting the special order. (Omit the"$" sign in your response.) |
| Incremental net operating income ..................................................................................................................................................
| $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
