MULTIPLE CHOICE:

1. Which of the following is never considered in incremental analysis?

A. Incremental revenue

B. Sunk costs

C. Incremental profit

D. Differential costs

2. When deciding between two alternatives, the preferred alternative always has:

A. No opportunity costs

B. Greater revenues than the other alternatives

C. Less expense than the other alternatives

D. Greater incremental profit than the other alternatives

3. A company is trying to decide whether to keep or drop the sporting goods department in its department store. If the segment is dropped, the manager will be fired. The managers salary, in relation to the decision ti keep or drop the sporting department, is:

A. Avoidable and therefore relevant

B. Not avoidable and therefore relevant

C. Sunk and therefore not relevant

D. The same for all alternatives and therefore not relevant

4. A product line should be dropped when:

A. It has a negative contribution margin

B. Its avoidable fixed cost are greater than its contribution margin

C. There will be a positive change in income if the product line is dropped

D. All of above

5. Joint cost are:

A. The cost of the common inputs for joint products

B. Greater when there are more joint products

C. Unnecessary if the accounting system is more sophisticated

D. Only used when there are no opportunity costs involved in the decision