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ACCY 121 – Questions for Chapter 11
CHAPTER 11: Decision Making And Relevant Information TRUE/FALSE 1. A decision model is a formal method for making a choice, frequently involving both quantitative and qualitative analyses. Answer: 2. True Difficulty: 1 Objective: 1
Feedback from previous decisions uses historical information and, therefore, is irrelevant for making future predictions. Answer: False Difficulty: 2 Objective: 1 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
4.
For decision making, differential costs assist in choosing between alternatives. Answer: True Difficulty: 1 Objective: 2
5.
For a particular decision, differential costs are always relevant. Answer: True Difficulty: 1 Objective: 2
6.
A cost may be relevant for one decision, but not relevant for a different decision. Answer: True Difficulty: 2 Objective: 2
7.
Revenues that remain the same for two alternatives being examined are relevant revenues. Answer: False Difficulty: 1 Objective: 2 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
11.
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: True Difficulty: 2 Objective: 3
18.
An incremental product cost is generally a fixed cost.
121_Ch11_Quiz
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ACCY 121 – Questions for Chapter 11
Answer: False Difficulty: 1 An incremental product cost is generally a variable cost. 19.
Objective:
4
If Optio n 1 costs $100 and Option 2 costs $80, then the differential cost is $180. Answer: False Difficulty: 1 Objective: 4 If...