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True or False questions True False Variable costs may not change under alternative courses of action, while fixed costs may change. True False When deciding

True or False questions

True

False

Variable costs may not change under alternative courses of action, while fixed costs may change.

True

False

When deciding whether to accept an order at a special price, management should make its decision on the basis of the total cost per unit and the expected revenue.

True

False

If a company is operating at full capacity, the incremental costs of a special order will likely include fixed manufacturing costs.

True

False

An example of an incremental analysis decision is make or buy.

True

False

Opportunity cost is the potential benefit that may be obtained by following an alternative course of action.

True

False

The basic decision rule in a sell or process further decision is: sell without further processing as long as the incremental revenue from processing exceeds the incremental processing costs.

True

False

Sell or process further decisions are particularly applicable to production processes that produce multiple products simultaneously.

True

False

An important factor to be considered in a retain or replace equipment decision is the book value of the old equipment.

True

False

A trade-in allowance or cash disposal value of an existing asset in a retain or replace equipment decision is irrelevant.

True

False

During incremental analysis, qualitative features that are not easily measured should be ignored.

True

False

An example of a qualitative factor is the effect on employees and the community when deciding whether to use outsourcing.

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