1. Which of the following is an irrelevant cost? A) B) C) D) An avoidable cost An incremental cost A sunk cost An opportunity cost 2. Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials Direct labor Variable overhead Fixed overhead $8,400 11,250 12,600 16,200 An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit. If Clemente accepts the offer, by how much will net income increase (decrease)? A) $3,750 B) $19,950 C) $(8,850) D) $(2,850) 3. The following information was taken from Southgate Industry's cash budget for the month of July: Beginning cash balance Cash receipts Cash disbursements If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is A) S160,000. B) $80,000. C) $240,000. D) $96,000. $480,000 304,000 544,000 Version I Page