1. A company is deciding whether to exchange an old asset for a new asset. Within the context of the exchange decision, and ignoring income tax considerations, the undepreciated book value of the old asset would be considered a(an) Sunk cost Irrelevant cost a. No No b. Yes No c. No Yes d. Yes Yes 2. Expected future costs that will differ among alternatives a. Opportunity cost. b. Relevant costs. c. Sunk cost. d. Out-of-pocket costs. 3. The sales manager of Alpha Electronics submitted a proposal to increase its production of digital watches. As part of the data presented, he reported the total additional cost required for the propose increase in production. The increase in total cost is known as a. Controllable cost. c. Opportunity cost. d. Relevant cost. e. None of these. b. Incremental cost. 4. An increase or decrease in cost between alternatives is called c. Differential cost. d. Controllable cost. a. Variable cost. e. None of these. b. Sunk cost. 5. Costs that do not appear in conventional accounting records and do not require peso outlays but do involve a foregone opportunity by the entity whose costs are being measured are a. Sunk cost. c. Imputed costs. d. Prime costs. b. Differential costs, Other things being equal, a profitable baking company that can sell sandwich, one of several products for only 90% of its total cost (allocated overhead makes overhead make up 30% of its total cost) should 6. a. Buy extra equipment in order to increase output and thereby attempt to lower production cost per loaf. b. Eliminate the sandwich bread. c. Allocate its overhead by some other method. d. Eliminate the sandwich bread only when its contribution to allocated overhead is reduced to zero.
1. A company is deciding whether to exchange an old asset for a new asset. Within the context of the exchange decision, and ignoring income tax considerations, the undepreciated book value of the old asset would be considered a(an) Sunk cost Irrelevant cost a. No No b. Yes No c. No Yes d. Yes Yes 2. Expected future costs that will differ among alternatives a. Opportunity cost. b. Relevant costs. c. Sunk cost. d. Out-of-pocket costs. 3. The sales manager of Alpha Electronics submitted a proposal to increase its production of digital watches. As part of the data presented, he reported the total additional cost required for the propose increase in production. The increase in total cost is known as a. Controllable cost. c. Opportunity cost. d. Relevant cost. e. None of these. b. Incremental cost. 4. An increase or decrease in cost between alternatives is called c. Differential cost. d. Controllable cost. a. Variable cost. e. None of these. b. Sunk cost. 5. Costs that do not appear in conventional accounting records and do not require peso outlays but do involve a foregone opportunity by the entity whose costs are being measured are a. Sunk cost. c. Imputed costs. d. Prime costs. b. Differential costs, Other things being equal, a profitable baking company that can sell sandwich, one of several products for only 90% of its total cost (allocated overhead makes overhead make up 30% of its total cost) should 6. a. Buy extra equipment in order to increase output and thereby attempt to lower production cost per loaf. b. Eliminate the sandwich bread. c. Allocate its overhead by some other method. d. Eliminate the sandwich bread only when its contribution to allocated overhead is reduced to zero.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:1. A company is deciding whether to exchange an old asset for a new asset. Within the context of the
exchange decision, and ignoring income tax considerations, the undepreciated book value of the old asset
would be considered a(an)
Sunk cost
Irrelevant cost
a.
No
No
b.
Yes
No
с.
No
Yes
Yes
Yes
P
2. Expected future costs that will differ among alternatives
a. Opportunity cost.
b. Relevant costs.
c. Sunk cost.
d. Out-of-pocket costs.
3. The sales manager of Alpha Electronics submitted a proposal to increase its production of digital
watches. As part of the data presented, he reported the total additional cost required for the propose
increase in production. The increause in total cost is known as
a. Controllable cost.
c. Opportunity cost.
d. Relevant cost.
e. None of these.
b. Incremental cost.
4. An increase or decrease in cost between alternatives is called
c. Differential cost.
d. Controllable cost.
a. Variable cost.
e. None of these.
b. Sunk cost.
5. Costs that do not appear in conventional accounting records and do not require peso outlays but do
involve a foregone opportunity by the entity whose costs are being measured are
a. Sunk cost.
c. Imputed costs.
d. Prime costs.
b. Differential costs,
Other things being equal, a profitable baking company that can sell sandwich, one of several
products for only 90% of its total cost (allocated overhead makes overhead make up 30% of its total cost)
should
6.
a. Buy extra equipment in order to increase output and thereby attempt to lower production cost per loaf.
b. Eliminate the sandwich bread.
c. Allocate its overhead by some other method.
d. Eliminate the sandwich bread only when its contribution to allocated overhead is reduced to zero.
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