50.Incremental analysis would be appropriate fora.acceptance of an order at a special price.b.a retain or replace equipment decision.c.a sell or process further decision.d.all of these.Ans: D, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis51.Which of the following is a true statement about cost behaviors in incremental analysis?1.Fixed costs will not change between alternatives.2.Fixed costs may change between alternatives.3.Variable costs will always change between alternatives.52.A company is considering the following alternatives:Alternative 1Alternative 2Revenues$120,000$120,000Variable costs60,00070,000Fixed costs35,00035,000Which of the following are relevant in choosing between the alternatives?53.It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what will be the effect on net income?21 - 11
54.Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:a.Income would decrease by $8,000.b.Income would increase by $8,000.c.Income would increase by $140,000.d.Income would increase by $40,000.Ans: D, LO: 3, Bloom: AN, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis
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