QUESTION 8 5.89 points Save Answer In deciding whether to drop its electronics product line, a company's manager should ignore the amount of unavoidable fixed costs the variable and fixed costs it could save by dropping the product line the revenues it would lose from dropping the product line the effect of dropping the electronics product line on the sales of its other products, like CDs QUESTION 9 5.89 points Save Answer Fixed costs that do not differ between two alternatives are relevant to the decision considered irrelevant to the decision important only if they represent a material dollar amount. considered opportunity costs QUESTION 10 5.89 points Save Answer A company is a price-taker when it has very high fixed costs it has considerable flexibility in setting prices of its products it operates in a highly competitive market its product is unique QUESTION 11 5.89 points Save Answer The contribution margin approach helps managers in short-term decision making because it reports only mixed costs it treats fixed manufacturing overhead as product cost it isolates costs by behavior it reports costs and revenues at present value QUESTION 12 5.89 points Save Answer Gabriel Metalworks produces a special kind of metal ingots which are unique, and it allows Gabriel to follow a cost-plus pricing strategy. Gabriel has $10,000,000 of assets and shareholders expect approximately 9% return on assets. Additional data are as follows: 400 units es volume $15 per unit ariable costs 1,500,00 xed cost ear Using the cost-plus pricing approach, what should be the price per unit? $20 $19 $22 $21 QUESTION 13 5.89 points Save Answer A company produces 100 microwave ovens per month, each of which includes one electrical circuit. The company currently manufactures the circuit in-house but is considering outsourcing the circuits at a contract price of $28 each. Currently, the cost of producing circuits in-house includes variable costs of $26 per circuit and fixed costs of $5,000 per month. Assume the fixed costs are unavoidable, but that company could employ the vacated premises to earn rental income of $700 per month. How will it affect monthly operating income, if the company Operating income will go up by $4,800 Operating income will go up by $500 Operating income will go down by $2,800 Operating income will go down by $200 QUESTION 14 5.89 points Save Answer Faros Hats Inc. has two product lines-baseball helmets and football helmets. The income statement data for the most recent year is as follows: Total Baseball Helmets Football Helmets $500,000 $350,0 riable expenses (530,000 280,000 $320,00 $250,000 $70 ribution margin Fixed expenses 180,000 (90,000 erating income loss If $50,000 of fixed costs will be eliminated by dropping the Football Helmets line, how will dropping Football Helmets affect operating income of the company? Operating income will decrease by $90,000 Operating income will increase by $50,000. Operating income will increase by $70,000. Operating income will decrease by $20,000. QUESTION 15 5.89 points Save Answer Nordic Avionics makes aircraft instrumentation. Its basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs. If the company upgrades the radio further to enhance its functionality, it will require an additional $25 per unit of variable costs, plus an increase in fixed costs of $800 per month. The marketing manager believes that they would be able to boost the price of the radio from $260 to $300. Nordic sells 30 radios per month. If Nordic decides to produce the improved version of the radio, what would the impact be on monthly operating income? It would increase by $1,050 It would decrease by $750. It would increase by $250. It would decrease by $350. QUESTION 16 5.89 points Save Answer Which of the following is one of the keys to short-term business decision-making? focus on sunk costs and quantitative data focus on relevant costs and use the contribution margin approach focus on qualitative data only and ignore future cash flows focus on costs which do not change under two alternatives and on historic costs 5.89 points QUESTION 17 Save Answer The benefit foregone by not choosing an alternative course of action is referred to as a(n) opportunity cost. sunk cost. variable cost. incremental cost