1.Irrelevant costs:

A.Do not affect the company's profit

B.Are always considered a sunk cost

C.Do not differ between alternatives

D.Affect contribution margin but not profit

2.A product line should be dropped if:

A.The variable costs of the product are higher than the direct fixed costs

B.The direct fixed costs are higher than the contribution margin

C.The common fixed costs allocated are higher than the direct fixed costs

D.the Sales are higher than the variable costs

3.Which of the following is NOT correct with regard to a make-or-buy decision:

A.The variable costs are relevant to the decision

B.The avoidable fixed costs are relevant to the decision

C.The unavoidable fixed costs are irrelevant to the decision

D.The revenue from selling the final product is relevant to the decision

4.Which of the following is an example of an opportunity cost?

A.Cash you paid for your car's gas that you could have saved if you took the bus

B.The salary of the manager of product X that could have been saved if the company decided not to produce product X

C.The rent that you could have gotten for the home you own if you rented it out instead of living in it

D.The rent you currently pay on your apartment that you could have saved if you lived with your parents

5.In a special-order decision, the fixed overhead costs:

A.are relevant to the decision

B.are considered variable

C.Are irrelevant to the decision

D.Affect the incremental profit from the special order