KA2e_SelfStudy_Ch23

KA2e_SelfStudy_Ch23 -...

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File: ch23, Chapter 23: Incremental Analysis and Capital Budgeting Multiple Choice 1. Three of the steps in management’s decision process are: (1) Review results of decision. (2) Develop data relevant to each course of action. (3) Make the decision. The steps are performed in the following order. a) (1), (2), (3). b) (3), (2), (1). c) (2), (1), (3). d) (2), (3), (1). Ans: d Response A: The order of the steps in the decision process is (2) develop data relevant to each course of action, (3) make the decision and (1) review the results of decision. Response B: The order of the steps in the decision process is (2) develop data relevant to each course of action, (3) make the decision and (1) review the results of decision. Response C: The order of the steps in the decision process is (2) develop data relevant to each course of action, (3) make the decision and (1) review the results of decision. Response D: Correct! The order of the steps in the decision process is (2) develop data relevant to each course of action, (3) make the decision and (1) review the results of decision. 2. Incremental analysis is the process of identifying the financial data that: a) do not change under alternative courses of action. b) change under alternative courses of action. c) are mixed under alternative courses of action. d) No correct answer is given. Ans: b Response A: Incremental analysis is the process of identifying the financial data that change under alternative courses of action. Response B: Correct! Incremental analysis is the process of identifying the financial data that change under alternative courses of action. Response C: Incremental analysis is the process of identifying the financial data that change under alternative courses of action. Response D: Since b is correct, this answer cannot be correct. 3. It costs a company $14 of variable costs and $6 of fixed costs to produce product A that sells for $30. A foreign buyer offers to purchase 3,000 units at $18 each. If the special offer is accepted and produced with unused capacity, net income will: a) decrease $6,000. b)
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This note was uploaded on 04/22/2009 for the course BCOR 2000 taught by Professor Brush during the Spring '07 term at Colorado.

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KA2e_SelfStudy_Ch23 -...

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