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Commerce 2AB3 Tutorial5 - Commerce 2AB3 Tutorial 5 Practice...

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MCQ 1. Which of the following statements is/are true : a. Fixed costs are irrelevant in a decision b. Any cost that is avoidable is relevant for decision purposes c. Sunk costs are sometimes relevant in decision making d. A cost that is relevant in one decision may not be relevant in another decision e. Both b. and d. above are true 2. Which of the following statements is/are true : a. Avoidable costs are also called differential costs b. Fixed costs that do not differ between alternatives are sunk costs c. The book value of a machine, as shown on the balance sheet, is relevant in a decision concerning the replacement of that machine by another machine d. Depreciation expense on existing factory equipment is generally relevant to a decision of whether to accept or reject a special offer for a company's product e. None of the above statements are true
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Clearwater Company operates a wine outlet in a tourist area. One litre bottles sell for $12. Daily fixed costs are $3,000, and variable costs are $6 per litre. An average of 750 litres is sold each
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