Multiples.. cost

1. A company is deciding whether to exchange an old asset for a new asset. Within the context of the exchange decision, and ignoring income tax considerations, the undepreciated book value of the old asset would be considered a(an) Sunk cost Irrelevant cost No No Yes No poop No Yes Yes Yes 2. Expected future costs that will differ among alternatives a. Opportunity cost. c. Sunk cost. b. Relevant costs. d. Out-of-pocket costs. 3. The sales manager of Alpha Electronics submitted a proposal to increase its production of digital watches. As part of the data presented, he reported the total additional cost required for the propose increase in production. The increase in total cost is known as a. Controllable cost. c. Opportunity cost. e. None of these. b. Incremental cost. d. Relevant cost. 4. An increase or decrease in cost between alternatives is called a. Variable cost. c. Differential cost. e. None of these. b. Sunk cost. d. Controllable cost. 5. Costs that do not appear in conventional accounting records and do not require peso outlays but do involve a foregone opportunity by the entity whose costs are being measured are a. Sunk cost. c. Imputed costs. b. Differential costs. d. Prime costs. 6. Other things being equal, a profitable baking company that can sell sandwich, one of several products for only 90% of its total cost (allocated overhead makes overhead make up 30% of its total cost) should a. Buy extra equipment in order to increase output and thereby attempt to lower production cost per loaf. b. Eliminate the sandwich bread. c. Allocate its overhead by some other method. d. Eliminate the sandwich bread only when its contribution to allocated overhead is reduced to zero.7. ABC Company temporarily has unused production capacity. The idle plant facilities can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more than its a. Fixed costs. c. Variable costs plus any opportunity cost of the idle facilities. b. Variable costs. d. Indirect costs plus any opportunity cost of the idle facilities. 8. In a make or buy situation, which of the following qualitative factors is usually considered? a. Special technology. c. Special materials requirements. e. All of these. b. Skilled labor. d. Quality control 9. Which of the following qualitative factors favors the buy choice in a make or buy decision? a. Maintaining a long-run relationship with suppliers. c. Utilization of idle capacity. b. Quality control is critical. D. All of these. 10. In deciding whether to manufacture a part or buy it from an outside vendor, a cost that is irrelevant to the short-run decision is a. Direct labor. b. Variable overhead c. Fixed overhead that will be avoided if the part is bought from an outside vendor. d. Fixed overhead that will continue even if the part is bought from the outside vendor. 11. In considering a special order situation that will enable a company to make use of presently idle capacity, which of the following costs would be irrelevant? a. Materials. b. Depreciation. c. Direct labor. d. Variable overhead. 12. Which of the following cost allocation methods would be used to determine the lowest price that could be quoted for special order that would utilize idle capacity within a production area? a. Job order. b. Process. c. Variable. d. Standard. 13. Costs which will require the expenditure of cash or the incurrence of a liability as a consequence of a management decision a. Direct costs. c. Out-of-pocket costs. e. Imputed costs. b. Avoidable costs. d. Sunk costs. 14. An income statement is prepared as an internal report. Under which of the following methods would the term contribution margin appear? Absorption costing Direct costing No No No Yes Yes No Yes Yes15. An income statement is prepared as an external report. Under which of the following would the term gross profit appear? Full costing Variable costing No No No Yes Yes No Yes Yes 16. Which of the following must be known about a production process to institute a direct costing system? a. The variable and fixed components of all costs related to production. b. The controllable and uncontrollable components of all costs related to production. c. Standard production rates and times for all elements of production. d. Contribution margin and break-even point for all goods in production. 17. What will be the difference in net income computed using direct costing as opposed to absorption costing if the ending inventory increase with respect to the beginning inventories in terms of units? a. There will be no difference in net income. b. Net income computed using direct costing will be higher. c. The difference in net income cannot be determined from the information given. d. Net income computed using direct costing will be lower. 18. Why is direct costing not in compliance with generally accepted accounting principles? a. Fixed manufacturing overhead are assumed to be period costs. b. Direct costing procedures are not well known in industry. c. Net incomes are always overstated when using direct costing procedures. d. Direct costing ignores the concept of LCM when valuing inventory. 19. The net income reported under absorption costing will exceed the income under direct costing for a period if a. Production equals sales for the period. b. Production exceeds sales for the period. c. Sales exceeds production for the period. d. The variable overhead exceeds the fixed overhead. 20. Net income reported under variable costing will exceed net income reported under absorption costing for the period a. Production equals sales for the period. b. Production is greater than sales for the period. c. Sales is greater than production for the period. d. The variable costs exceeds the fixed costs