Accounting

Remaining: | |

1. When will the elimination of a product line have no effect on the company's overall profit? (Points : 2)

When the avoidable fixed costs equal the product line's contribution margin

When the unavoidable fixed costs equal the product line's contribution margin

When there are no fixed costs incurred by the product line

When the product line contribution margin is negative |

2. Alvarez Company is considering the following alternatives:

Alternative A Alternative B

Revenues $50,000 $60,000

Variable costs 30,000 30,000

Fixed costs 10,000 16,000

What is the incremental profit? (Points : 2)

$10,000

$0

$6,000

$4,000 |

3. Sorrento Company's plant is operating at less than full capacity. The company just received a one-time opportunity to accept an order at a special price below its usual price. The special price exceeds its variable costs. Therefore, which statement is true? (Points : 2)

Fixed costs are relevant.

The order will likely be accepted.

The order will likely be rejected.

Sorrento should expand its plant capacity before accepting the order. |

4. Which of the following steps in the management decision-making process generally involves the managerial accountant? (Points : 2)

Determine possible courses of action.

Make the appropriate decision based on relevant data.

Prepare internal reports that review the impact of decisions.

Assign responsibility. |

5. Which one of the following is not a disadvantage of buying rather than making a component of a company's product? (Points : 2)

Quality control specifications may not be met.

The outside supplier could increase prices significantly in the future.

Profitable product lines may be dropped.

The supplier may not deliver on time. |

6. A previously incurred cost which will not change in the future is a(n) (Points : 2)

opportunity cost.

historical cost.

fixed cost.

sunk cost. |

7. Costs that will differ between alternatives and influence the outcome of a...