7. ABC Company temporarily has unused production capacity. The idle plant facilities can be used tomanufacture a low-margin item. The low-margin item should be produced if it can be sold for more thanitsc. Variable costs plus any opportunity cost of the idle facilities.d. Indirect costs plus any opportunity cost of the idle facilities.a. Fixed costs.b. Variable costs.8. In a make or buy situation, which of the following qualitative factors is usually considered?a. Special technology.b. Skilled labor.c. Special materials requirements.d. Quality control.e. All of these.9. Which of the following qualitative factors favors the buy choice in a make or buy decision?a. Maintaining a long-run relationship with suppliers.b. Quality control is critical.c. Utilization of idle capacity.D. All of these.10. In deciding whether to manufacture a part or buy it from an outside vendor, a cost that is irrelevantto the short-run decision isa. Direct labor.b. Variable overheadc. Fixed overhead that will be avoided if the part is bought from an outside vendor.d. Fixed overhead that will continue even if the part is bought from the outside vendor.11. In considering a special order situation that will enable a company to make use of presently idlecapacity, which of the following costs would be irrelevant?a. Materials.b. Depreciation.c. Direct labor.d. Variable overhead.12. Which of the following cost allocation methods would be used to determine the lowest price thatcould be quoted for special order that would utilize idle capacity within a production area?a. Job order.b. Process.c. Variable.d. Standard.13. Costs which will require the expenditure of cash or the incurrence of a liability as a consequence ofa management decisiona. Direct costs.b. Avoidable costs.c. Out-of-pocket costs.d. Sunk costs.e. Imputed costs.14. An income statement is prepared as an internal report. Under which of the following methods wouldthe term contribution margin appear?Absorption costingDirect costingNoNoa.b.NoYesYesNoс.d.YesYes

The minimum selling price when there is any excess capacity should able to cover the relevant cost…

7. ABC Company temporarily has unused production capacity. The idle plant facilities can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more than its c. Variable costs plus any opportunity cost of the idle facilities. d. Indirect costs plus any opportunity cost of the idle facilities. a. Fixed costs. b. Variable costs.

7. ABC Company temporarily has unused production capacity. The idle plant facilities can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more than its c. Variable costs plus any opportunity cost of the idle facilities. d. Indirect costs plus any opportunity cost of the idle facilities. a. Fixed costs. b. Variable costs.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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