1. When making volume trade-off decisions managers should focus on which of the following?

• Contribution margin per unit

• Gross margin per unit of the constraining resource

• Gross margin per unit

• Contribution margin per unit of the constraining resource

2. Which of the following statements are true? More than one may be true.

1. The variable costs of a product are relevant in a decision concerning whether to eliminate the product.
2. Fixed costs are irrelevant in decisions about whether a product should be dropped.
3. A product whose revenues do not cover its variable costs and its traceable fixed costs should usually be dropped.
4. In a decision to drop a product, the product should be charged for rent in proportion to the space it occupies even if the space has no alternative use and the rental payment is unavoidable.

3. Which of the following statements is true? More than one may be true.

1. When a company has a production constraint, total contribution margin will be maximized by emphasizing the products with the highest contribution margin per unit of the constrained resource.
2. When a company has a production constraint, the product with the lowest contribution margin per unit of the constrained resource should usually be given highest priority.

4. Which of the following statements is true? More than one may be true.

1. The term joint cost is used to describe the costs incurred up to the split-off point in a process involving joint products.
2. The split-off point in a process that produces joint products is the point in the manufacturing process at which the joint products can be recognized as separate products.
3. Two or more products that are produced from a common input are known as joint products.