Question 1

Which of the following is not a common input resulting in joint products?

		A) A log which is made into different grades of lumber.
		B) Raw milk which is made into cheese, skim milk, and other dairy products.
		C) Flour which is made into bread, cookies, and other baked goods.
		D) A hog which is made into ham, bacon, and other meat products.

Question 2

A company is currently making a necessary component in house (the company is producing the component for its own use). The company has received an offer to buy the component from an outside supplier. A machine is being rented to make the component. If the company were to buy the component, the machine would no longer be rented. The rent on the machine, in relation to the decision to make or buy the component, is:

		A) sunk and therefore not relevant.
		B) avoidable and therefore not relevant.
		C) avoidable and therefore relevant.
		D) unavoidable and therefore relevant.

Question 3

Which of the following is never considered in incremental analysis?

		A) Incremental revenue
		B) Sunk costs
		C) Incremental profit
		D) Differential costs

Question 4

Two or more products that result from common inputs are called

A)		split products.
B)		joint products.
	C)	combination products.
	D)	common products.

Question 5

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.