Savoy Company rents out an unused section of its warehouse to another company for $8,888. The rental agreement expires next month. Rather than renewing the agreement with the tenant, Savoy Company is thinking about using the space to store its IT spare equipment, consumables and corporate gifts. The best term to describe the $8,888 per month is

Sunk cost

Selling and marketing cost

Variable cost

Period cost

Opportunity cost

4

Cedar, a manufacturer of chocolate, paid 2013 and 2014 insurance premium on 5 January 2013 to earn the 15% discounts available. The premium for the two years was $816,000. Seventy percent of the premium is associated with manufacturing operations and thirty percent is related to companys selling and administrative activities. How much should the insurance premium be classified as the period cost of first years coverage?

$285,600

$408,000

$288,000

None of the above

$244,800

5

1. Which of the following statements is (are) true? I. Relevant revenues and relevant costs are the only information managers need to select among alternatives. II. All variable costs are relevant and all fixed costs are irrelevant. III. Avoidable variable and fixed costs should be evaluated when deciding whether to discontinue a product, product line, business segment, or customer.

(II)

(III)

(I) and (II)

(II) and (III)

(I)