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Each multiple choice question is worth 2 points for a total of 40 points. 1) Costs that do not differ between alternatives are A) relevant
Each multiple choice question is worth 2 points for a total of 40 points. 1) Costs that do not differ between alternatives are A) relevant to the decision B) considered opportunity costs C) considered irrelevant to the decision D) important only if they represent a material dollar amount 2) Smith Industries is considering replacing a machine that is presently used in its production process. Replacement Old Machine Machine $55 $46,000 Remaining useful life in years Current age in years Book value $33,000 Current disposal value in cash uture disposal value in cash (in 5 years) Annual cash operating costs $9,000 $0 $8 $4 Which of the information provided in the table is irrelevant to the replacement decision? A) the sales price of the new machine B) the original cost of the old machine C) the current disposal value of the old machine D) the annual cash operating costs 3) Which of following statements is true of short-term decision making? A) Fixed costs and variable costs must be analyzed separately B) All costs behave in the same way C) Unit manufacturing costs are variable costs. D) All costs involved in a decision are considered relevant. 4) Differential analysis is a method that_ A) evaluates both relevant and irrelevant information B) considers all areas of the traditional income statement C) is not used for short-term decision making D) looks at how operating income would differ under each decision alternative
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