A SINGLE AMOUNT 1. Costs that can A) sunk costs B) opportunity costs C) avoidabl

Question

A SINGLE AMOUNT 1. Costs that can A) sunk costs B) opportunity costs C) avoidable costs D) irrelevant costs. 2. Accepting a special order will improve overall net operating income if the incremental revenue from the special order exceeds: A) the contribution margin on the order B) the incremental costs associated with the order. C) the variable costs associated with the order D) the sunk costs associated with the order 3. K Corporation manufactures five different products. All five of these products must pass through a stamping machine in its fabrication department. This machine is K's constrained resource. K would make the most profit if it produces the product that A) uses the least amount of stamping time B) generates the highest contribution margin per unit C) generates the highest contribution margin ratio D) generates the highest contribution margin per stamping machine hour. 4. Product X is one of the joint products in a joint manufacturing process. Management is considering whether to sell X at the split-off point or to process X further into X2. The following data have been gathered: I. Selling price of X Il. Variable cost of processing X into X2 IlI. The avoidable fixed costs of processing X into X2 IV. The selling price of X2 V. The joint cost of the process from which X is produced Which of the above items are relevant in a decision of whether to sell the X as is or process it further into X2? A) I, II, and IV. B) I, II, III, and IV C) II, IlI, and V D) I, II, IlI, and V

Explanation / Answer

1) Answer (C) Avoidable costs

2) Answer (B) Incremental costs associated with the order

3) Answer (D) Generates highest contribution margin per stamping machine hour.

4) Answer (B) I,II, III,IV

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