ACC 561 Week 6 Quiz

38. A major accounting contribution to the managerial decision-making process in

evaluating
possible courses of action is to
provide relevant revenue and cost data about each course of action.
determine the amount of money that should be spent on a project.
decide which actions that management should consider.
assign responsibility for the decision.
45. In incremental analysis,
only costs are analyzed.
only revenues are analyzed.
both costs and revenues may be analyzed.
both costs and revenues that stay the same between alternate courses of action will be analyzed.
46. Incremental analysis is most useful
as a replacement technique for variance analysis.
in evaluating the master budget.
in developing relevant information for management decisions.
in choosing between the net present value method and the internal rate of return method.
53. It costs Ross Co. $24 of variable and $10 of fixed costs to produce one bathroom scale
which normally sells for $70. A foreign wholesaler offers to purchase 2,000 scales at $30
each. Ross would incur special shipping costs of $2 per scale if the order were accepted.
Ross has sufficient unused capacity to produce the 2,000 scales. If the special order is
accepted, what will be the effect on net income?
$8,000 decrease
$12,000 decrease
$60,000 increase
$8,000 increase

69. Carter, Inc. can make 100 units of a necessary component part with the following costs:
Direct Materials
$120,000
Direct Labor
20,000
Variable Overhead 60,000
Fixed Overhead
40,000
If Carter purchases the component externally, $30,000 of the fixed costs can be avoided. At what
external price for the 100 units is the company indifferent between making or buying?
$170,000
$200,000
$230,000
$240,000
79. Mink Manufacturing is unsure of whether to sell its product assembled or unassembled.
The unit cost of the unassembled product is $60 and Mink would sell it for $130. The cost to
assemble the product is estimated at $42 per unit and the company believes the market
would support a price of $170 on the assembled unit. What decision should Mink make?
Process further, the company will be better off by $28 per unit.
Sell before assembly, the company will be better off by $40 per unit.
Sell before assembly, the company will be better off by $2 per unit.
Process further, the company will be better off by $58 per unit.
90. A company decided to replace an old machine with a new machine. Which of the
following is considered a relevant cost?
Depreciation expense on the old equipment
The loss on the disposal of the old equipment
The book value of the old equipment
The current disposal price of the old equipment