MA QUIZ 4 - Relevant Costing
Quiz by Jamal Haider Naqvi
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- Q1
When deciding whether to accept a special order, managers need to consider whether they have available excess capacity.
truefalseTrue or False30s - Q2
Variable costs are irrelevant to a special decision when those variable costs differ between alternatives
falsetrueTrue or False30s - Q3
If a product line has a negative contributionmargin, the product is not covering its fixed costs and should be discontinued.
truefalseTrue or False30s - Q4
Fixed costs that will continue to exist if a product is discontinued are relevant.
falsetrueTrue or False30s - Q5
When making outsourcing (make-or-buy) decisions, the focus is on how best to use available resources
truefalseTrue or False30s - Q6
Unavoidable fixed costs are
none of the above.
irrelevant to the decision of whether to discontinue a product line because they will differ between alternatives
relevant to the decision of whether to discontinue the department.
irrelevant to the decision of whether to discontinue a product line because they will not differ between alternatives
45s - Q7
All of the following are outsourcing considerations, except
Are any fixed costs avoidable if we outsource?
How do our fixed costs compare to the outsourcing cost?
How do our variable costs compare to the outsourcing cost?
What could we do with the freed capacity?
45s - Q8
Ina special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be
irrelevantto the decision.
relevant to the decision.
opportunity costs.
sunk costs.
45s - Q9
Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6100units, are as follows (click picture). Assuming no other use for its facilities, what is the highest price per unit that Cruise Company should pay for the part?
$5.70
$8.70
$13.10
$11.80
60s - Q10
Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow (click the picture). If $25,000of fixed costs will be eliminated by discontinuing the Sporty line, how willoperating income be affected?
Increase $111,000
Increase $15,000
Decrease $35,000
Increase $13,000
60s
