Accounting+Multiple+Choice

Accounting+Multiple+Choice - Multiple Choice 1. Costs which...

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Multiple Choice 1. Costs which can be eliminated in whole or in part if a particular business segment is discontinued are called: a. irrelevant costs. b. sunk costs. c. opportunity costs. d. avoidable costs. 2. 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. 3. Which of the following best describes an opportunity cost: a. it is not a relevant cost in decision making, and is not part of the traditional accounting records b. it is a relevant cost in decision making, and is part of the traditional accounting records. c. it is a relevant cost in decision making, but is not part of the traditional accounting records. d. it is not a relevant cost in decision making, but is part of the traditional accounting records 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. Rice Corporation currently operates two divisions which had operating results last year as follows: West Division Troy Division Sales $600,000 $300,000 Variable costs 310,000 200,000 Contribution margin 290,000 100,000 Traceable fixed costs 110,000 70,000 Allocated common corporate costs 90,000 45,000 Net operating income (loss) $ 90,000 ($15,000) Since the Troy Division also sustained an operating loss in the prior year, Rice's president is considering the elimination of this division. Troy Division's traceable fixed costs could be avoided if the division were eliminated. The total common corporate costs would be unaffected by the decision. If the Troy Division had been eliminated at the beginning of last year, Rice Corporation's operating income for last year would have been: a. $15,000 higher b. $45,000 lower c. $30,000 lower d. $60,000 higher
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6. Supler Company produces a part used in the manufacture of one of its products. The unit product cost is $18, computed as follows: Direct materials $ 8 Direct labor 4 Variable manufacturing overhead 1 Fixed manufacturing overhead 5 Unit product cost $18 An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. It is estimated that 60 percent of the fixed overhead cost above could be eliminated if the parts are purchased from the outside supplier. Based on these data, the per-unit dollar advantage or disadvantage of purchasing from the outside supplier would be: a. $4 disadvantage b. $1 advantage c. $1 disadvantage d. $2 advantage 7. Motor Company manufactures 10,000 units of Part M-l each year for use in its production. The following total
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This note was uploaded on 07/13/2010 for the course BUSI 101 taught by Professor Wormer during the Spring '08 term at Acton School of Business.

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Accounting+Multiple+Choice - Multiple Choice 1. Costs which...

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