Deck 11: Decision Making and Relevant Information

Question 1

Feedback from previous decisions uses historical information and,therefore,is irrelevant for making future predictions.

Answer 1

False

Question 2

Answer the following questions using the information below:
Contrafic Lighting manufactures small flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.
$$\begin{array} { l r r } & \text { Current } & \text { Projected } \\\text { Demand } & 75,000 \text { units } & 68,000 \text { units } \\\text { Selling price } & \$ 8.50 & \$ 9.25 \\\text { Incremental cost per unit } & \$ 4.80 & \$ 4.80\end{array}$$

-Would you recommend the 75-cent price increase?

A) No, because demand decreased.
B) No, because the selling price increases.
C) Yes, because contribution margin per unit increases.
D) Yes, because operating profits increase.

Answer 2

Yes, because operating profits increase.

Question 3

Feedback regarding previous actions may affect ________.

A) future predictions
B) implementation of the decision
C) the decision model
D) All of these answers are correct.

Answer 3

D

Question 4

Sunk costs ________.

A) are relevant
B) are differential
C) have future implications
D) are ignored when evaluating alternatives

Question 5

Answer the following questions using the information below:
Contrafic Lighting manufactures small flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.
$$\begin{array} { l r r } & \text { Current } & \text { Projected } \\\text { Demand } & 75,000 \text { units } & 68,000 \text { units } \\\text { Selling price } & \$ 8.50 & \$ 9.25 \\\text { Incremental cost per unit } & \$ 4.80 & \$ 4.80\end{array}$$

-If the price increase is implemented,operating profit is projected to ________.

A) increase by $25,100
B) decrease by $5,250
C) increase by $5,250
D) decrease by $7,000

Question 6

Which of the following costs always differ among future alternatives?

A) fixed costs
B) historical costs
C) relevant costs
D) variable costs

Question 7

Which of the following costs is relevant in a decision-making process?

A) prepaid insurance costs
B) historical costs
C) sunk costs
D) variable costs

Question 8

Explain the five-step decision process that managers can use to make decisions.

Question 9

Answer the following questions using the information below:
Contrafic Lighting manufactures small flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.
$$\begin{array} { l r r } & \text { Current } & \text { Projected } \\\text { Demand } & 75,000 \text { units } & 68,000 \text { units } \\\text { Selling price } & \$ 8.50 & \$ 9.25 \\\text { Incremental cost per unit } & \$ 4.80 & \$ 4.80\end{array}$$

-When using the five-step decision process,which one of the following steps should be done last?

A) obtain information
B) choose an alternative
C) evaluation and feedback
D) implementing the decision

Question 10

Lander Metals Inc.manufactures automobile spare parts for car manufacturers.Management is attempting to search for ways to reduce manufacturing labor costs and has received a proposal from a consulting company to rearrange the production floor next year.Using the information below regarding current operations and the new proposal,which of the following decisions should management accept? $\begin{array}{lrr}&\text { Current }&\text { Proposed }\\\text { Required machine operators } & 16 & 12 \\\text { Materials-handling workers } & 3.00 & 3.00 \\\text { Employee average pay } & \$ 15 \text { per hour } & \$ 18 \text { per hour } \\\text { Hours Worked per employee } & 3,400 & 3,150\end{array}$

A) Do not change the production floor.
B) Rearrange the production floor.
C) Either, because it makes no difference to the employees.
D) It doesn't matter because the costs incurred will remain the same.

Question 11

The formal process of choosing between alternatives is known as a(n)________.

A) relevant model
B) decision model
C) alternative model
D) prediction model

Question 12

A decision model involves a(n)________.

A) informal method of making a choice at the lower level management using sensitivity analysis
B) formal method of making a choice that often involves both quantitative and qualitative analyses
C) informal method of making a choice which is discussed in detailed in the financial reports
D) formal method of making a choice at the lower level management using advanced management techniques such as balance scorecard

Question 13

Sunk costs are ________.

A) costs incurred as a result of an investment position
B) costs that is the sum of all costs in a particular business function of the value chain
C) the contributions to operating income that is forgone by not using a limited resource in its next-best alternative use
D) costs that are unavoidable and cannot be changed no matter what action is taken

Question 14

Sunk costs ________.

A) are future costs for decision making
B) are avoidable costs
C) are irrelevant for decision making
D) are foregone contribution by not using a limited resource in its next-best alternative use

Question 15

Answer the following questions using the information below:
Contrafic Lighting manufactures small flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.
$$\begin{array} { l r r } & \text { Current } & \text { Projected } \\\text { Demand } & 75,000 \text { units } & 68,000 \text { units } \\\text { Selling price } & \$ 8.50 & \$ 9.25 \\\text { Incremental cost per unit } & \$ 4.80 & \$ 4.80\end{array}$$

-When using the five-step decision process,which one of the following steps should be done first?

A) obtain information
B) choose an alternative
C) evaluation and feedback
D) implementing the decision

Question 16

For decision making,a listing of the relevant costs ________.

A) will help the decision maker concentrate on the pertinent data
B) will only include historical costs
C) will only include costs that that are same among alternatives
D) will include both sunk costs and opportunity costs

Question 17

Place the following steps from the five-step decision process in order:
$A =$ Obtain information including historical costs
$\mathrm { B } =$ Evaluate performance to provide feed back
$\mathrm { C } =$ Make decisions choosing among altematives
$D =$ Make predictions about the future
$\mathrm { E } =$ Identify the problem and uncertainties

A) $A, E, D, B, C$
B) $\mathrm{C}_{,} \mathrm{D}_{,} \mathrm{E}_{,} \mathrm{~A}_{,} \mathrm{~B}$
C) $\mathrm{E}_{,} \mathrm{~A}_{,} \mathrm{D}, \mathrm{C}, \mathrm{B}$
D) D, $C_{,} B_{,} A_{,} E$

Question 18

Which of the following is an example of sunk costs?

A) wages to security staffs
B) cost of purchasing raw materials
C) cost of an alternative investment
D) wages payable to skilled laborers to make a product

Question 19

A decision model is an informal method for making a choice,using simpler methods like surveying.

Question 20

In evaluating different alternatives,it is useful to concentrate on ________.

A) variable costs
B) fixed costs
C) total costs
D) relevant costs

Question 21

Full costs of a product are the sum of ________.

A) fixed costs and sunk costs in all the business functions of the value chain
B) variable costs and sunk costs in all the business functions of the value chain
C) all variable and fixed costs in all the business functions of the value chain
D) fixed costs, variable costs, and sunk costs in the value chain

Question 22

When deciding to accept a one-time-only special order from a wholesaler,management should ________.

A) consider the sunk costs and opportunity costs
B) not consider the special order's impact on future prices of their products
C) determine whether excess capacity is available
D) verify past design costs for the product

Question 23

Quantitative factors ________.

A) include financial information, but not nonfinancial information
B) can be expressed in monetary terms
C) are always relevant when making decisions
D) include employee morale

Question 24

Answer the following questions using the information below:
John's 8-year-old Chevrolet Trail Blazer requires repairs estimated at $6,000 to make it roadworthy again. His wife, Sherry, suggested that he should buy a 5-year-old used Jeep Grand Cherokee instead for $6,000 cash. Sherry estimated the following costs for the two cars:
$\begin{array}{lrr}&\text { Trail Blazer }&\text { Grand Cherokee }\\\text { Acquisition cost } & \$ 25,000 & \$ 6,000 \\\text { Repairs } & \$ 6,000 & - \\\text { Annual operating costs } & & \\\text { (Gas, maintenance, insurance) } & \$ 2,280 & \$ 2,100\end{array}$

-What should John do? What are his savings in the first year?

A) Buy the Grand Cherokee; $8,100
B) Fix the Trail Blazer; $3,180
C) Buy the Grand Cherokee; $180
D) Fix the Trail Blazer; $6,280

Question 25

One-time-only special orders should only be accepted if ________.

A) incremental revenues exceed incremental costs
B) differential revenues exceed variable costs
C) incremental revenues exceed fixed costs
D) total revenues exceed total costs

Question 26

When making decisions ________.

A) more weightage should be given to qualitative factors
B) more weightage should be given to quantitative factors
C) appropriate weight must be given to both quantitative and qualitative factors
D) both quantitative and qualitative factors are unimportant

Question 27

What is the change in operating profits if the one-time-only special order for 1,000 units is accepted for $540 a unit by Coroid?

A) $210,000 increase in operating profits
B) $30,000 increase in operating profits
C) $30,000 decrease in operating profits
D) $225,000 decrease in operating profits

Question 28

Answer the following questions using the information below:
Coroid Manufacturers Inc. is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:
$\begin{array}{l}\text { Variable costs: }\\\text { Direct materials } & \$ 120 \\\text { Direct labor } & 60 \\\text { Manufacturing support } & 105 \\\text { Marketing costs } & 45\\\text { Fixed costs: }\\\text { Manufacturing support } & 135 \\\text { Marketing costs } & \underline{45}\\\text { Total costs } & 510 \\\text { Markup (50\%) } & 255 \\\text { Targeted selling price } & \$ 765\end{array}$

-For Coroid Manufacturers Inc.,what is the minimum acceptable price of this special order?

A) $330
B) $290
C) $340
D) $510

Question 29

Employee morale at Dos Santos,Inc.,is very high.This type of information is an example of ________.

A) qualitative factors
B) quantitative factors
C) irrelevant factors
D) financial factors

Question 30

Answer the following questions using the information below:
Coroid Manufacturers Inc. is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:
$\begin{array}{l}\text { Variable costs: }\\\text { Direct materials } & \$ 120 \\\text { Direct labor } & 60 \\\text { Manufacturing support } & 105 \\\text { Marketing costs } & 45\\\text { Fixed costs: }\\\text { Manufacturing support } & 135 \\\text { Marketing costs } & \underline{45}\\\text { Total costs } & 510 \\\text { Markup (50\%) } & 255 \\\text { Targeted selling price } & \$ 765\end{array}$

-What is the full cost of the product per unit?

A) $330
B) $765
C) $510
D) $255

Question 31

Answer the following questions using the information below:
John's 8-year-old Chevrolet Trail Blazer requires repairs estimated at $6,000 to make it roadworthy again. His wife, Sherry, suggested that he should buy a 5-year-old used Jeep Grand Cherokee instead for $6,000 cash. Sherry estimated the following costs for the two cars:
$\begin{array}{lrr}&\text { Trail Blazer }&\text { Grand Cherokee }\\\text { Acquisition cost } & \$ 25,000 & \$ 6,000 \\\text { Repairs } & \$ 6,000 & - \\\text { Annual operating costs } & & \\\text { (Gas, maintenance, insurance) } & \$ 2,280 & \$ 2,100\end{array}$

-The cost NOT relevant for this decision is the ________.

A) acquisition cost of the Trail Blazer
B) acquisition cost of the Grand Cherokee
C) repairs to the Trail Blazer
D) annual operating costs of the Grand Cherokee

Question 32

Ratzlaff Company has a current production level of 20,000 units per month.Unit costs at this level are: $$\begin{array} { l r } \text { Direct materials } & \$ 0.25 \\\text { Direct labor } & 0.40 \\\text { Variable overhead } & 0.15 \\\text { Fixed overhead } & 0.20 \\\text { Marketing - fixed } & 0.20 \\\text { Marketing/distribution - variable } & 0.40\end{array}$$ Current monthly sales are 18,000 units.Jim Company has contacted Ratzlaff Company about purchasing 1,500 units at $2.00 each.Current sales would NOT be affected by the one-time-only special order,and variable marketing/distribution costs would NOT be incurred on the special order.What is Ratzlaff Company's change in operating profits if the special order is accepted?

A) $400 increase in operating profits
B) $400 decrease in operating profits
C) $1,800 increase in operating profits
D) $1,800 decrease in operating profits

Question 33

Answer the following questions using the information below:
Coroid Manufacturers Inc. is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:
$\begin{array}{l}\text { Variable costs: }\\\text { Direct materials } & \$ 120 \\\text { Direct labor } & 60 \\\text { Manufacturing support } & 105 \\\text { Marketing costs } & 45\\\text { Fixed costs: }\\\text { Manufacturing support } & 135 \\\text { Marketing costs } & \underline{45}\\\text { Total costs } & 510 \\\text { Markup (50\%) } & 255 \\\text { Targeted selling price } & \$ 765\end{array}$

-What is the contribution margin per unit?

A) $170
B) $220
C) $435
D) $510

Question 34

Qualitative factors ________.

A) generally are easily measured in quantitative terms
B) are generally irrelevant for decision making
C) may include either financial or nonfinancial information
D) include customer satisfaction

Question 35

When there is an excess capacity,it makes sense to accept a one-time-only special order for less than the current selling price if ________.

A) incremental revenues exceed incremental costs
B) additional fixed costs is incurred to accommodate the order
C) the company placing the order is in the same market segment as your current customers
D) incremental revenue equals incremental operating income

Question 36

Answer the following questions using the information below:
John's 8-year-old Chevrolet Trail Blazer requires repairs estimated at $6,000 to make it roadworthy again. His wife, Sherry, suggested that he should buy a 5-year-old used Jeep Grand Cherokee instead for $6,000 cash. Sherry estimated the following costs for the two cars:
$\begin{array}{lrr}&\text { Trail Blazer }&\text { Grand Cherokee }\\\text { Acquisition cost } & \$ 25,000 & \$ 6,000 \\\text { Repairs } & \$ 6,000 & - \\\text { Annual operating costs } & & \\\text { (Gas, maintenance, insurance) } & \$ 2,280 & \$ 2,100\end{array}$

-A relevant cost is a cost that is a(n)________.

A) future cost
B) past cost
C) sunk cost
D) non-cash expense

Question 37

Answer the following questions using the information below:
John's 8-year-old Chevrolet Trail Blazer requires repairs estimated at $6,000 to make it roadworthy again. His wife, Sherry, suggested that he should buy a 5-year-old used Jeep Grand Cherokee instead for $6,000 cash. Sherry estimated the following costs for the two cars:
$\begin{array}{lrr}&\text { Trail Blazer }&\text { Grand Cherokee }\\\text { Acquisition cost } & \$ 25,000 & \$ 6,000 \\\text { Repairs } & \$ 6,000 & - \\\text { Annual operating costs } & & \\\text { (Gas, maintenance, insurance) } & \$ 2,280 & \$ 2,100\end{array}$

-A relevant revenue is revenue that is a(n)________.

A) past revenue
B) future revenue
C) in-hand revenue
D) earned revenue

Question 38

Which of the following is true of relevant information?

A) All fixed costs are relevant.
B) Future revenues and expenses are relevant.
C) Past costs are not relevant.
D) All fixed costs are not relevant.

Question 39

Which of the following is true of historical costs?

A) They are useful for making future predictions.
B) They are used for decision making.
C) They are always accounted as opportunity costs.
D) They cannot be fixed costs.

Question 40

Roberto owns a small body shop.His major costs include labor,parts,and rent.In the decision-making process,these costs are considered to be ________.

A) empirical costs
B) qualitative factors
C) quantitative factors
D) opportunity costs

Question 41

Answer the following questions using the information below:
Contrafic's Kitchens is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
$\begin{array}{lr}\text { Direct materials } & \$ 546 \\\text { Direct labor } & 360 \\\text { Variable manufacturing support } & 54 \\\text { Fixed manufacturing support } & 120 \\\quad \text { Total manufacturing costs } & 1,080 \\\text { Markup (60\%) } & 648 \\\text { Targeted selling price } & \$ 1,728\end{array}$ Contrafic's Kitchens has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $60 per unit. The average marketing cost of Contrafic's Kitchens is $180 per order.

-For Contrafic's Kitchens,what is the full cost of the one-time-only special order?

A) $1,020
B) $1,140
C) $1,080
D) $1,320

Question 42

Answer the following questions using the information below:
Black Forrest manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $180 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Back Forrest's policy to add a 50% markup to full costs.
Black Forrest is invited to bid on a one-time-only special order to supply 100 rustic tables.What is the lowest price Black Forrest should bid on this special order?

A) $12,600
B) $14,400
C) $18,000
D) $23,000

Question 43

Factors used to decide whether to outsource a part include ________.

A) the supplier's cost of direct materials
B) if the supplier is reliable
C) the original cost of equipment currently used for production of that part
D) past design costs used to develop the current composition of the part

Question 44

An example of a qualitative factor for the decision-making process is ________

A) customer satisfaction
B) employee wages
C) audit report
D) manufacturing overhead

Question 45

Business function costs are ________.

A) the sum of all fixed costs, sunk costs, and opportunity costs in a particular business function of the value chain
B) the sum of all variable and fixed costs in a particular business function of the value chain
C) the sum of all variable and fixed costs in all business functions of the value chain
D) the sum of all fixed costs, sunk costs, and opportunity costs in all business functions of the value chain

Question 46

Direct materials are $600,direct labor is $150,variable overhead costs are $450,and fixed overhead costs are $300.The cost of one unit is ________.

A) $450
B) $750
C) $1200
D) $1500

Question 47

Zephram Corporation has a plant capacity of 200,000 units per month.Unit costs at capacity are: $$\begin{array} { l r } \text { Direct materials } & \$ 4.00 \\\text { Direct labor } & 6.00 \\\text { Variable overhead } & 3.00 \\\text { Fixed overhead } & 1.00 \\\text { Marketing-fixed } & 7.00 \\\text { Marketing/distribution-variable } & 3.60\end{array}$$ Current monthly sales are 190,000 units at $30.00 each.Q,Inc.,has contacted Zephram Corporation about purchasing 2,000 units at $24.00 each.Current sales would not be affected by the one-time-only special order.What is Zephram's change in operating profits if the one-time-only special order is accepted?

A) $14,800 increase
B) $17,200 increase
C) $22,000 increase
D) $33,200 increase

Question 48

Snapper Tool Company has a production capacity of 3,000 units per month,but current production is only 2,500 units.Total manufacturing costs are $60 per unit and marketing costs are $16 per unit.Doug Levy offers to purchase 500 units at $76 each for the next five months.Should Snapper accept the one-time-only special order if only absorption-costing data are available?

A) Yes, good customer relations are essential.
B) No, the company will only break even.
C) No, since only the employees will benefit.
D) Yes, since operating profits will most likely increase.

Question 49

Relevant costs are ________.

A) sunk costs
B) expected future costs
C) actual present costs
D) historical costs

Question 50

Answer the following questions using the information below:
Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
$\begin{array}{lr}\text { Direct materials } & \$ 90,000 \\\text { Direct labor } & 130,000 \\\text { Variable factory overhead } & 60,000 \\\text { Fixed factory overhead } & 140,000 \\\quad \text { Total costs } & \$ 420,000\end{array}$ Of the fixed factory overhead costs, $60,000 is avoidable.

-Assuming no other use of their facilities,the highest price that Piels should be willing to pay for 10,000 units of the part is ________.

A) $420,000
B) $280,000
C) $340,000
D) $360,000

Question 51

The sum of all the costs incurred in a particular function,such as marketing,is called the ________.

A) business function cost
B) full product cost
C) opportunity cost
D) total manufacturing overhead

Question 52

Answer the following questions using the information below:
Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
$\begin{array}{lr}\text { Direct materials } & \$ 90,000 \\\text { Direct labor } & 130,000 \\\text { Variable factory overhead } & 60,000 \\\text { Fixed factory overhead } & 140,000 \\\quad \text { Total costs } & \$ 420,000\end{array}$ Of the fixed factory overhead costs, $60,000 is avoidable.

-Conners Company has offered to sell 10,000 units of the same part to Piels Corporation for $36 per unit.Assuming there is no other use for the facilities,Schmidt should ________.

A) make the part, as this would save $6 per unit
B) buy the part, as this would save $6 per unit
C) buy the part, as this would save the company $60,000
D) make the part, as this would save $2 per unit

Question 53

Which of the following costs is irrelevant in the decision making of a special order when there is idle production capacity?

A) fixed manufacturing costs
B) units sold
C) material cost
D) labor hours incurred

Question 54

Answer the following questions using the information below:
Black Forrest manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $180 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Back Forrest's policy to add a 50% markup to full costs.
A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style.Black Forrest Incorporated is invited to submit a bid to the hotel chain.What is the lowest price per unit Black Forrest should bid on this long-term order?

A) $126
B) $144
C) $180
D) $270

Question 55

Answer the following questions using the information below:
Contrafic's Kitchens is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
$\begin{array}{lr}\text { Direct materials } & \$ 546 \\\text { Direct labor } & 360 \\\text { Variable manufacturing support } & 54 \\\text { Fixed manufacturing support } & 120 \\\quad \text { Total manufacturing costs } & 1,080 \\\text { Markup (60\%) } & 648 \\\text { Targeted selling price } & \$ 1,728\end{array}$ Contrafic's Kitchens has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $60 per unit. The average marketing cost of Contrafic's Kitchens is $180 per order.

-Other than price,what other items should Contrafic's Kitchens consider before accepting this one-time-only special order?

A) reaction of shareholders
B) reaction of existing customers to the lower price offered to Mr. Louis Cifer
C) demand for cherry cabinets
D) price is the only consideration

Question 56

Which of the following costs is NOT considered to calculate the minimum acceptable price of a one-time-only special order?

A) marketing costs
B) direct material costs
C) indirect material costs
D) special design costs

Question 57

Past costs themselves are always irrelevant when making decisions.

Question 58

The best way to avoid misidentification of relevant costs is to focus on ________.

A) expected future costs that differ among the alternatives
B) historical costs
C) unit fixed costs
D) total unit costs

Question 59

Unit cost data can most mislead decisions by ________.

A) not computing fixed overhead costs
B) computing labor and materials costs only
C) computing administrative costs
D) not computing unit costs at the same output level

Question 60

Which of the following is an appropriate step when identifying relevant costs to make a business decision?

A) assuming all variable costs are relevant
B) assuming all fixed costs are irrelevant
C) separating total costs into business function costs and full costs
D) separating total costs into variable and fixed components

Question 61

The rent paid for an already existing facility is an example of a sunk cost.

Question 62

Business function costs are the sum of all variable and fixed costs in all business functions of the value chain.

Question 63

Past costs are also called sunk costs because they are unavoidable and cannot be changed no matter what action is taken.

Question 64

Qualitative factors,as well as relevant revenues and relevant costs need to be considered when selecting among alternatives.

Question 65

Revenues that remain the same for two alternatives being examined are relevant revenues.

Question 66

In the decision making of a one-time-only special order,it is assumed that accepting the special order is not expected to affect the selling price to other customers.

Question 67

Equal weight must be given to qualitative factors and quantitative nonfinancial factors while making decisions.

Question 68

A cost may be relevant for one decision,but NOT relevant for a different decision.

Question 69

Sunk costs are irrelevant to decision making.

Question 70

A sunk cost is a relevant cost in a decision making.

Question 71

Marketing costs will be an irrelevant cost in the decision making of a one-time-only special order.

Question 72

For one-time-only special orders,fixed costs may be relevant but NOT variable costs.

Question 73

In relevant-cost analysis,managers should not consider all variable as relevant and all fixed costs as irrelevant.

Question 74

Qualitative factors are outcomes that can be easily measured in numerical terms,such as the costs of direct labor.

Question 75

In a one-time special order situation,if the price offered by the buyer is less than the absorption cost per unit,the special order may still be profitable since absorption costs include allocated fixed manufacturing overhead.

Question 76

An incremental product cost is generally a fixed cost.

Question 77

Bid prices and costs that are relevant for regular orders are the same costs that are relevant for one-time-only special orders.

Question 78

Full costs of a product include variable and fixed costs in a particular business function in the value
chain.

Question 79

Qualitative factors are important in the decision-making process even though they cannot be measured numerically.

Question 80

Quantitative factors,such as direct material costs,are outcomes that are measured in numerical terms.