1. A major accounting contribution to the managerial decision making process in evaluating possible courses of action is to
2. Which of the following stages of the management decision-making process is improperly sequenced?
3. The process of evaluating financial data that change under alternative courses of action is called
4. Non-financial information that management might evaluate in making a decision would not include
5. Incremental analysis would be appropriate for
A. A acceptance of an order at a special price
B. a retain or replace equipment decision
C. a sell or process decision
D. All of these
6. Which of the following is a true statement about cost behaviours in incremental analysis?
1 Fixed costs will not change between alternatives.
2 Fixed costs may change between alternatives.
3 Variable costs will always change between alternatives.
7. In incremental analysis,
A. cost are not relevant if they change between alternatives
B. all costs are if they change between alternatives
C. Only fixed costs are relevant
D. only variable costs are relevant
8. Diggs Ltd has excess capacity. Under what situations should the company accept a special order for less than the current selling price?
B. When additional fixed costs must be incurred to accommodate the order
C. When the company thinks it can use the cheaper materials without the customer’s knowledge
D. When incremental revenues exceed incremental costs
9. If a company must expand capacity to accept a special order, it is likely that there will be an increase in:
A. Unit variable costs
B. fixes costs
C. variable and fixed per unit
D. Fixed costs
10. An opportunity cost
A. should be initially recorded as an asset
B. is the cost of a new product proposal
C. is the potential benefit that may be obtained by following an alternative course of action
D. is classified as manufacturing overhead
11. Opportunity cost must be considered in decisions involving
B. financial accounting
C. CVP analysis
D. resource that have alternative uses
12. Which one of the following is not a disadvantage of buying rather than making a component of a company’s product?
A. Quality control specifications may not be met
B. The outside supplier could increase prices significantly in the future
C. Profitable product lines may be dropped
D. The supplier may not deliver on time
13. In a make or buy decision, opportunity costs are
A. Added to the make total cost
B. deduced from the make total cost
C. added to the buy total cost
14. Which of the following would generally not affect a make or buy decision?
A. selling expenses
B. Direct labor
C. Variable manufacturing costs
D. Opportunity cost
15. The decision rule on whether to sell or process further
A. varies from situation to situation
B. is process further as long as total revenue exceeds present revenues
C. is process further if incremental revenue from such processing exceeds incremental fixed costs
D. is process further if incremental revenue from such processing exceeds the incremental processing costs
16. The focus of a sell or process further decision is
A. incremental revenue
B. incremental cost
C. both incremental revenue and incremental cost
D. neither incremental revenue nor incremental cost
17. A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?
A. The carrying amount of the old equipment
B. Depreciation expense on the old equipment
C. the loss on the disposal of the equipment
D. The current disposal price of the old equipment
18. Carrying amount of old equipment is considered to be a
A. relevant cost
B. semi-relevant cost
D. cost that can be changed by a present or future decision
19. All of the following are relevant in deciding whether to eliminate an unprofitable segment except the segment’s
B. Variable expenses
C. contributing margin
D. fixed expansion
20. If an unprofitable segment is eliminated
A. it is impossible for profit to decrease
B. fixed expenses allocated to the eliminated segment will be eliminated
C. Variable expenses of the eliminated segment will be eliminated
D. it is impossible for profit to increase
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