HW 2 ANSWERS - Universidad Iberoamericana UNIBE 1....

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Universidad Iberoamericana UNIBE 1. Incremental cost is: a. The difference in total costs that result from selecting one choice instead of another. b. The profit forgone by selecting one choice instead of another. c. A cost that continues to be incurred in the absence of activity. d. A cost common to all choices in question and not clearly or feasibly allocable to any of them. Incremental cost is the difference in total cost between two courses of action. 2. Controllable costs a. Arise from periodic appropriation decisions and have no well-specified function relating inputs to outputs. b. Are primarily subject to the influence of a given manager of a given responsibility center for a given time span. c. Arise from having property, plant, and equipment, and a functioning organization. d. Result specifically from a clear-cut measured relationship between inputs and outputs. 3. Conversion costs do not include a. Depreciation. b. Direct materials. c. Indirect labor. d. Indirect materials. 4. Conversion cost pricing
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a. Places minimal emphasis on the cost of materials used in manufacturing a product. b. Could be used when the customer furnishes the material used in manufacturing a product. c. Places heavy emphasis on indirect costs and disregards consideration of direct costs. d. Places heavy emphasis on direct costs and disregards consideration of indirect costs. Conversion costs consist of direct labor and factory overhead the costs of converting raw materials into finished goods. Normally a company does not consider only conversion costs in making pricing decisions, but if the customer were to furnish the raw materials, conversion cost pricing would be appropriate. 5.
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This note was uploaded on 08/10/2011 for the course ECON 123 taught by Professor Other during the Spring '11 term at Pontificia Universidad Catolica Madre y Maestra.

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HW 2 ANSWERS - Universidad Iberoamericana UNIBE 1....

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