1）In incremental analysis, total fixed costs will always remain constant under

Question

1）In incremental analysis, total fixed costs will always remain constant under alternative courses of action.

True or False

2）In making decisions the management accountant and management ordinarily considers:

a.both financial and nonfinancial information

b. financial data but not nonfinancial information

c.non financial information

d.none of the above

3)A special one-time order should not be accepted if the unit sales price is less than the unit variable cost or marginal cost incurred

True or False

4)If an incremental make or buy analysis indicates that it is cheaper to buy rather than make an item, management should always make the decision to choose the lowest cost alternative without regard for issues like quality or employee morale

True or False

5)The basic decision rule in a sell or process further decision is: process further if the incremental revenue from processing exceeds the incremental processing costs.

True or False

6)In a decision concerning replacing old equipment with new equipment, the book value of the old equipment can be considered a sunk cost and irrelevant to the decision.

True or False

7)The elimination of an unprofitable product line may adversely affect the remaining product lines.

True or False

8)If a company is operating at full capacity, the incremental costs of a special order will likely include fixed manufacturing costs.

True or False

Explanation / Answer

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1In incremental analysis, total fixed costs will always remain constant under alternative courses of action.

false

2)In making decisions the management accountant and management ordinarily considers:Â

a.both financial and nonfinancial information

3)A special one-time order should not be accepted if the unit sales price is less than the unit variable cost or marginal cost incurred

True

4)If an incremental make or buy analysis indicates that it is cheaper to buy rather than make an item, management should always make the decision to choose the lowest cost alternative without regard for issues like quality or employee morale

False

5)The basic decision rule in a sell or process further decision is: process further if the incremental revenue from processing exceeds the incremental processing costs.

True

6)In a decision concerning replacing old equipment with new equipment, the book value of the old equipment can be considered a sunk cost and irrelevant to the decision.

true

7)The elimination of an unprofitable product line may adversely affect the remaining product lines.

True

8)If a company is operating at full capacity, the incremental costs of a special order will likely include fixed manufacturing costs.

True

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