1.The best definition of differential analysis is:

(5pts)

a. an analysis of the benefits foregone when one alternative is selected over another.

b. an analysis of allocated fixed costs related to each product line.

c. an analysis of variable costs that are the same from one alternative course of action to another.

d. an analysis that looks at the difference in revenues and costs from one alternative course of action to another.

e. None of the answer choices is correct.

2.The best definition of allocated fixed costs is:

(5pts)

a. Fixed costs that can be traced directly to a customer.

b. Fixed costs that are forgone when one alternative is selected over another.

c. Fixed costs that cannot be traced directly to a customer.

d. Fixed costs that differ between alternatives.

e. None of the answer choices is correct.

3Barkley Company currently makes a product internally but is considering outsourcing production. Barkley rents a special machine used to make the product, and would no longer need this machine if the part is outsourced. The rent on the machine is what type of cost for this make-or-buy decision?

(5pts)

a. sunk and not differential.

b. avoidable and differential.

c. unavoidable and differential.

d. avoidable and not differential.

e. None of the answer choices is correct.