1. Which of the following statements is true regarding special order decisions? a. Special order decisions are long-run decisions. b. Both quantitative and qualitative impacts should be considered. c. Whether or not the company has excess capacity is seldom a consideration for special order decisions. d. The sales price of a special order should never be below the price offered to regular customers.

2. Which of the following would not be a factor in the consideration of whether or not a special order should be accepted? a. Sunk costs b. Qualitative factors c. Variable costs d. Excess capacity

3. Which of the following would not be a factor in the consideration of whether or not a special order is accepted? a. Unavoidable fixed costs b. Variable costs c. Sales price of the special order d. Avoidable fixed costs

4. Which of the following types of costs should always be considered in special order decisions? a. Unavoidable costs b. Relevant costs c. Sunk costs d. Fixed costs Which of the following will always be considered in special order decisions? a. Sunk costs b. Fixed costs c. Unavoidable costs d. Excess capacity

5. A local science museum normally sells tickets to its museum for $5 each. The daily maximum capacity of the museum is 1,000 visitors. At the maximum capacity, fixed costs are $2 per visitor and variable costs are $1.50 per visitor. A local school group has approached the museum wishing to purchase 50 special passes at a cost of $2.50 each. Assuming the museum has excess capacity, if the special order were accepted, net income would: a. decrease by $50.00. b. increase by $50.00. c. decrease by $125.00. d. increase by $125.00.

6. A local vendor at the county fair sells snow cones for $.50 each. When 250 snow cones are sold, each snow cone is estimated to have $.10 in variable costs and $.15 in fixed costs. A local school group plans on attending the fair next week and wishes to purchase 50 snow cones for $.25 each. The vendor can sell as many as 400 snow cones per day. If the special order were accepted, net income would: a. not change. b. increase by $7.50. c. decrease by $25.00. d. increase by $12.50.

7. A local vendor at the county fair sells snow cones for $.50 each. When 250 snow cones are sold, each snow cone is estimated to have $.10 in variable costs and $.15 in fixed costs. A local school group plans on attending the fair next week and wishes to purchase 50 snowcones for $.25 each. The vendor can sell as many as 400 snowcones per day. What is the minimum price the vendor should charge for the snowcones? a. $.10 b. $.25 c. $.50

8. Preston Wade, a local craftsman, normally sells his handcrafted wooden birdhouses for $145 each. Preston has the capacity to produce as many as 60 birdhouses a week. In a normal week, Preston makes 20 birdhouses with the following costs per unit: Direct materials $12.00 Direct labor $15.00 Variable overhead $3.00 Fixed overhead $5.00 Refer to the Preston Wade information above. Preston has received a special order from a local plant nursery to purchase 40 birdhouses for a price of $80 each. The nursery wishes to have the birdhouses engraved with their own logo, therefore, the order would require the rental of a special engraving tool at a cost of $250. If Preston accepts the special order, net income will increase by: a. $3,200 b. $1,750 c. $1,050 d. $2,000

9. Preston has received a special order from a local plant nursery to purchase 40 birdhouses for a price of $80 each. The nursery wishes to have the birdhouses engraved with their own logo, therefore, the order would require the rental of a special engraving tool at a cost of $250. If Preston accepts the special order, net income will increase by:

a. $3,200

b. $1,750

c. $1,050

d. $2,000

10. The traditional income statement focuses on: a. variable costing. b. cost function. c. contribution margin. d. cost behavior.

11. Which of the following would you not find on a traditional income statement? a. Net operating income b. Contribution margin c. Sales revenue d. Gross profit

12. Which of the following would you not find on a contribution margin income statement? a. Gross profit b. Contribution margin c. Net operating income d. Sales revenue

13. The difference between sales and cost of goods sold is called: a. net income. b. contribution margin. c. gross profit. d. finished goods inventory.

14. The difference between sales and variable costs is called: a. gross profit b. contribution margin. c. net income. d. cost of goods sold.

15. The contribution margin income statement is structured in such a way as to emphasize: a. organizational efficiency. b. cost functionality. c. cost behavior. d. cost drivers.

16. While preparing a contribution margin income statement, the costs are shown in which of the two categories? a. Variable and fixed b. Direct materials and indirect materials c. Avoidable and unavoidable d. Product and period

17. While preparing a traditional income statement, the costs are shown in which of the two categories? a. Product and period b. Variable and fixed c. Direct materials and indirect materials d. Avoidable and unavoidable

18. Which of the following statements is true regarding the traditional income statement? a. It will group costs into categories based on their behavior (fixed or variable). b. It will include a subtotal called contribution margin. c. Sales revenue is based on the units produced rather than the units sold. d. It is required for external reporting purposes.

19. Which of the following statements is false regarding the contribution margin income statement? a. It is not allowed for external reporting purposes. b. It is used by management to perform cost-volume-profit analysis. c. It will include a subtotal called gross profit. d. It will group costs into categories based on their behavior (fixed or variable).