1. What is a relevant cost? (25 points)
2. Prentice Company is considering dropping one of its product lines. What costs of the product line would be relevant to this decision? What costs would be irrelevant? (25 points)
3. In what way can the use of a ROI as a performance measure for investment centers lead to bad decisions? How does the Residual Income Approach overcome these problems? (25 points)
4. Why does the Balanced Scorecard include financial performance measures, as well as measures of how internal business processes are doing? (25 points)