Practice Quiz 13 - Practice Quiz 13 1. Which of the...

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Practice Quiz 13 1. Which of the following cash flows is relevant in a decision about accepting Alternative X or Alternative Y? A) a cash inflow for Alternative X that is not a cash inflow for Alternative Y. B) a cash inflow that is lost if Alternative X is accepted and is not lost if Alternative Y is accepted. C) a cash outflow that is avoided if Alternative X is accepted and is not avoided if Alternative Y is accepted. D) all of the above. 2. Which of the following best describes an opportunity cost: A) it is a relevant cost in decision making, but is not part of the traditional accounting records. B) it is not a relevant cost in decision making, but is part of the traditional accounting records. C) it is a relevant cost in decision making, and is part of the traditional accounting records. D) it is not a relevant cost in decision making, and is not part of the traditional accounting records. 3. Consider the following statements: I. A division's net operating income, after deducting both traceable and allocated common corporate costs, is negative. II. The division's avoidable fixed costs exceed its contribution margin. III. The division's traceable fixed costs plus its allocated common corporate costs exceed its contribution margin. Which of the above statements give an economic reason for eliminating the division? A) Only I B) Only II C) Only III D) Only I and II 1
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4. The acceptance of a special order will improve overall net operating income so long as the revenue from the special order exceeds: A) the contribution margin on the order. B) the incremental costs associated with the order. C) the variable costs associated with the order. D) the sunk costs associated with the order. 5. Kinsi Corporation manufactures five different products. All five of these products must pass through a stamping machine in its fabrication department. This machine is Kinsi's constrained resource. Kinsi would make the most profit if it produces the product that: A) uses the lowest number of stamping machine hours. B) generates the highest contribution margin per unit. C) generates the highest contribution margin ratio. D) generates the highest contribution margin per stamping machine hour. 6. Hodge Inc. has some material that originally cost $74,600. The material has a scrap value of $57,400 as is, but if reworked at a cost of $1,500, it could be sold for $54,400. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as is as scrap? A) -$79,100 B) -$21,700 C) -$4,500 D) $52,900 7. Beaver Company (a multi-product firm) produces 5,000 units of Product X each year. Each unit of Product X sells for $8 and has a contribution margin of $5. If Product X is discontinued, $18,000 of fixed overhead would be eliminated. As a result of discontinuing Product X, the company's overall operating income would: A) decrease by $25,000 B) increase by $43,000 C) decrease by $7,000 D) increase by $7,000 2
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8. ABD Realty manages five apartment complexes in its region. Shown below
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This note was uploaded on 12/05/2009 for the course ACC ACC 502 taught by Professor Prof.l.liu during the Spring '09 term at CSU Dominguez Hills.

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Practice Quiz 13 - Practice Quiz 13 1. Which of the...

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