ACC 561 Week 6 Practice Quiz Study Guide
A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to
provide relevant revenue and cost data about each course of action.
decide which actions that management should consider.
assign responsibility for the decision.
determine the amount of money that should be spent on a project.
In incremental analysis,
only costs are analyzed.
only revenues are analyzed.
both costs and revenues may be analyzed.
both costs and revenues that stay the same between alternate courses of action will be analyzed.
Incremental analysis is most useful
in choosing between the net present value method and the internal rate of return method.
in evaluating the master budget.
as a replacement technique for variance analysis.
in developing relevant information for management decisions.
It costs Ross Co. $24 of variable and $10 of fixed costs to produce one bathroom scale which normally sells for $70. A foreign wholesaler offers to purchase 2,000 scales at $30 each. Ross would incur special shipping costs of $2 per scale if the order were accepted. Ross has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?
Carter, Inc. can make 100 units of a necessary component part with the following costs:
Direct Materials $120,000
Direct Labor 20,000
Variable Overhead 60,000
Fixed Overhead 40,000
If Carter purchases the component externally, $30,000 of the fixed costs can be avoided. At what external price for the 100 units is the company indifferent between making or buying?
Mink Manufacturing is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $60 and Mink would sell it for $130. The cost to assemble the product is estimated at $42 per unit and the company believes the market would support a price of $170 on the assembled unit. What decision should Mink make?
Sell before assembly, the company will be better off by $2 per unit.
Sell before assembly, the company will be better off by $40 per unit.
Process further, the company will be better off by $58 per unit.
Process further, the company will be better off by $28 per unit.
A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?
The current disposal price of the old equipment
The book value of the old equipment
Depreciation expense on the old equipment
The loss on the disposal of the old equipment
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