1. Which of the following is a major advantage of using the contribution margin approach with variable costing instead of with absorption costing? Cost-volume-profit information is available on the income statement. Accounting information is available on the balance sheet. c) Profits can be generated solely by increasing the inventory level. d) There is no need to assume users are sophisticated 2. Warson Ltd. is considering closing its Alberta division. Which of the following would NOT be relevant to the closure decision? All variable costs Contribution margin on lost sales Site cleanup costs d) The salary of the branch manager to be transferred b) 3. BBG Ltd.'s weekly production output is 400 units of a product that sells for $20 per unit and has variable costs of $16 per unit. Maximum capacity is 500 units per month. Total fixed costs per month are $3,400. A special order is received for 100 units at a price of $18 per unit. In deciding whether to accept or reject the order at this price, what should BBG consider? The difference between the offered price and the variable cost per unit b) The old fixed cost of $8.50 per unit The new fixed cost of $6.80 per unit The difference between the offered price per unit and fixed price per unit a) 4. In inventory management, which of the following would be included in carrying costs? Inspecting costs Internal failure costs Obsolescence costs Stockout costs b) 5. Which of the following methods of allocating service department costs results in the most accurate product cost? Direct method Step method Reciprocal method Activity-based costing method