Quiz21 - Quiz Chapter 21 1. Opportunity costs are: A) not...

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Page 1 Quiz – Chapter 21 1. Opportunity costs are: A) not used for decision making. B) the same as variable costs. C) the same as historical costs. D) relevant to decision making. 2. Freestone Company is considering renting Machine Y to replace Machine X. It is expected that Y will waste less direct materials than does X. If Y is rented, X will be sold on the open market. For this decision, which of the following factors is (are) relevant? I. Cost of direct materials used II. Resale value of Machine X A) Only I B) Only II C) Both I and II D) Neither I nor II 3. In a sell or process further decision, which of the following costs are relevant? I. A variable production cost incurred prior to the split-off point. II. An avoidable fixed production cost incurred after the split-off point. A) Only I. B) Only II. C) Both I and II. D) Neither I nor II. Use the following to answer questions 4-6: The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720,000. If these microcomputers are upgraded at a total cost of $100,000, they can be sold for a total of $160,000. As an alternative, the microcomputers can be sold in their present condition for $50,000. 4. The sunk cost in this situation is: A) $720,000. B) $160,000. C) $ 50,000. D) $100,000.
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Page 2 5. What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition? A) $110,000 advantage.
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Quiz21 - Quiz Chapter 21 1. Opportunity costs are: A) not...

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