1)Costs which are always relevant in decision making are those costs which are:

a.		sunk.
b.		avoidable.
c.		variable.
d.		fixed.

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2) A labor efficiency variance resulting from the use of poor quality materials should be charged to:

a.		the production manager.
b.		manufacturing overhead.
c.		the industrial engineering department.
d.		the purchasing agent.

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3) The Gomez Corporation is considering two projects, T and V. The following information has been gathered on these projects:

Project T Project V

Initial Investment Needed $112,500 $75,000

Present Value of Future Cash Inflows $168,000 $107,000

Useful Life 10 year 10 years Based on this information, which of the following statements is (are) true? I. Project T has the highest ranking according to the project profitability index criterion. II. Project V has the highest ranking according to the net present value criterion.

a.		Both I and II
b.		Neither I nor II
c.		Only II
d.		Only I

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