Multiple Choice Questions:

1) If a company wishes to be a price-setter, which of the following strategies should they take?

A) Produce a generic mass-market product

B) Enter a competitive market and boost profits by cost cutting

C) Produce a unique product

D) Produce a commodity and outsource the manufacturing operations

2) In deciding whether to drop its electronics product line, a company's manager should ignore:

A) The variable and fixed costs it could save by dropping the product line.

B) The revenues it would lose from dropping the product line.

C) How dropping the electronics product line would affect sales of its other products, like CDs.

D) The amount of unavoidable fixed costs.

3) Which of the following statements describes a scenario when management should consider dropping a business division?

A) The division has been reporting an operating loss consistently.

B) The division's avoidable fixed costs are less than its contribution margin.

C) The division's avoidable fixed costs are greater than its contribution margin.

D) The division's unavoidable fixed costs are greater than its operating loss.

4) Which of the following is the key to choose the product type to be maximized, in making product mix decisions under constraining factors?

A) Revenue per unit

B) Contribution margin per unit of product

C) Contribution margin per unit of the constraining factor

D) Gross profit per unit using traditional costing

5) ________ Refer to the value forgone in order to make one particular investment instead of another.

A) Opportunity costs

B) Sunk costs

C) Relevant costs

D) Irrelevant costs