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DECISION MAKING AND RELEVANT INFORMATION
By :Dr. Suyanto, SE, MM, M.Ak
Email : suyanto@cbn.net.id
TRUE/FALSE
1.
A decision model is a formal method for making a choice, frequently involving
both quantitative and qualitative analyses.
Answer
:
True
Difficulty
:
1
Objective
:
1
Terms to Learn
:
decision model, quantitative factors, qualitative factors
2.
Feedback from previous decisions uses historical information and, therefore, is
irrelevant for making future predictions.
Answer
:
False
Difficulty
:
2
Objective
:
1
Terms to Learn
:
relevant costs
Historical costs may be helpful in making future predictions, but are not relevant
costs for decision making.
3.
The amount paid to purchase tools last month is an example of a sunk cost.
Answer
:
True
Difficulty
:
2
Objective
:
2
Terms to Learn
:
sunk costs
4.
For decision making, differential costs assist in choosing between alternatives.
Answer
:
True
Difficulty
:
1
Objective
:
2
Terms to Learn
:
differential cost
5.
For a particular decision, differential revenues and differential costs are always
relevant.
Answer
:
True
Difficulty
:
1
Objective
:
2
Terms to Learn
:
differential cost, differential revenue
6.
A cost may be relevant for one decision, but not relevant for a different decision.
Answer
:
True
Difficulty
:
2
Objective
:
2
Terms to Learn
:
relevant costs
111
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Revenues that remain the same for two alternatives being examined are relevant
revenues.
Answer
:
False
Difficulty
:
1
Objective
:
2
Terms to Learn
:
relevant revenues
Revenues that remain the same between two alternatives are irrelevant for that
decision since they do not differ between alternatives.
8.
Sunk costs are past costs that are unavoidable.
Answer
:
True
Difficulty
:
1
Objective
:
2
Terms to Learn
:
sunk costs
9.
The cost of a machine purchased last year will be irrelevant in a decision for next
year.
Answer
:
True
Difficulty
:
2
Objective
:
2
Terms to Learn
:
sunk costs, relevant costs
10.
A sunk cost can never be relevant.
Answer
:
True
Difficulty
:
2
Objective
:
2
Terms to Learn
:
sunk costs, relevant costs
11.
Quantitative factors are always expressed in numerical terms.
Answer
:
True
Difficulty
:
2
Objective
:
3
Terms to Learn
:
quantitative factors
12.
Qualitative factors are outcomes that are measured in numerical terms, such as the
costs of direct labor.
Answer
:
False
Difficulty
:
1
Objective
:
3
Terms to Learn
:
qualitative factors
Quantitative
factors are outcomes that are measured in numerical terms, such as the
costs of direct labor.
13.
If a manufacturer chooses to continue purchasing direct materials from a supplier
because of the ongoing relationship that has developed over the years, the decision
is based on qualitative factors.
Answer
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 Spring '10
 Liu
 Decision Making

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