Two costs that are never relevant in any decision are sunk costs and future costs that do not differ between the alternatives. Select one: True False oppurtunity cost , variable cost , traceable fixed cost , allocated common fixed cost can make a segment look less profitable than it really is.

Opportunity costs are not actual dollar outlays and are not recorded in the formal financial statements of an organization.

Select one:

True

False

In a make or buy decision, we should buy a product from an external supplier if the total relevant costs of making are less than the outside purchase price from the supplier.

Select one:

True

False

A decision to manufacture a product internally rather than to buy externally from a supplier is called...

Select one:

a.

Add or drop a product decision

b.

Make or buy decision

c.

Sell or process further decision

d.

Accept or reject a special order decision

Relevant costs are situational. Specifically, costs that are relevant in one decision situation may not be relevant in another context.

Select one:

True

False

Avoidable costs are relevant costs and unavoidable costs are irrelevant costs.

Select one:

True

False

Which of the following is not a relevant cost in a make or buy decision?

Select one:

a.

Allocated common costs

b.

Incremental costs of making the product

c.

Outside purchase price

d.

Opportunity cost of utilizing the factory space for another product/purpose

Under what situation should we keep a product or segment?

Select one:

a.

Contribution margin lost of $100,000, Fixed costs avoided of $50,000

b.

Contribution margin lost of $50,000, Fixed costs avoided of $100,000

c.

Contribution margin lost of $70,000, Fixed costs avoided of $100,000

d.

Contribution margin lost of $60,000, Fixed costs avoided of $70,000

Sunk costs are a relevant cost in a make or buy decision.

Select one:

True

False