Question :
61. Ortega Company reported the following information for the company’s two : 1208245
61. Ortega Company reported the following information for the company’s two products:
Assume that 75,000 machine hours are available; product X takes 2 machine hours to produce, and product Y takes 4 machine hours to produce. The company can sell all it can make of either product. Which of the following statements is true?
A. Product X should be produced because more of it can be produced.
B. Product X should be produced because it will produce greater profit.
C. Product Y should be produced because it provides a greater contribution margin.
D. Both products provide the same total profit.
62. The following information is provided for two products:
Assume the products will be sold in a store where shelf space is a scarce resource and there is sufficient room for only one of the two products. Expected sales for Product X are 8,000 units, and expected sales for Product Y are 6,000 units. Which product should be sold and why?
A. Product X should be sold solely because expected demand is greater.
B. Product X should be sold because sales of this product will provide a greater profit.
C. Product Y should be sold because sales of this product will provide a greater profit.
D. Product Y should be sold because it provides a greater contribution margin.
63. Sunk costs:
A. Impact the future
B. Differ among the alternatives.
C. Are not considered when evaluating new proposals.
D. Are relevant.
64. Jill currently works for a law firm full time and earns $60,000 a year. She is thinking of quitting her job to pursue a medical degree. Medical school will cost her $100,000 per year. If Jill quits her job and goes to medical school, the salary she currently earns would be considered what type of cost?
A. Opportunity cost
B. Sunk cost
C. Relevant cost
D. Fixed cost
65. Halley Company has just received a special order for 1,000 deck chairs. Halley has sufficient idle capacity to accept the order. Accepting the order will increase Halley’s variable manufacturing costs. Which type of cost is considered a sunk cost to Halley’s decision of whether to accept or reject the special order?
A. Raw materials to make the 1,000 deck chairs
B. Depreciation on equipment that would be used to make the chairs
C. Salary of the production manager
D. Materials handling cost
66. Halley Company has just received a special order for 1,000 deck chairs. Halley has sufficient idle capacity to accept the order. Accepting the order will increase Halley’s variable manufacturing costs. Which type of cost is considered relevant to Halley’s decision of whether to accept or reject the special order?
A. Company president’s salary
B. Raw materials to make the1,000 chairs
C. Salary of the production manager
D. Depreciation on equipment that would be used to make the chairs
67. Halley Company has just received a special order for 1,000 deck chairs. Halley has sufficient idle capacity to accept the order. Accepting the order will increase Halley’s variable manufacturing costs. During idle time, Halley normally performs maintenance on the production equipment to ensure its operation. If Halley accepts the order and decides not to do the scheduled maintenance what type of cost is the maintenance costs?
A. Sunk cost
B. Mixed cost
C. Budgeted cost
D. None of the other answers are correct.
68. When evaluating alternatives, what type of costs should be considered?
A. Fixed costs
B. Sunk costs
C. Prevention costs
D. Relevant costs
69. Special order decisions:
A. Involve an offer from a customer to buy goods at a lower-than-normal selling price.
B. Involve buying goods from other companies rather than making them internally.
C. Involve an offer to sell goods at a price that is higher than normal.
D. None of the other answers are correct.
70. Which of the following statements is incorrect?
A. Accepting a special order will involve incurring unit-level costs.
B. An outsourcing decision typically affects unit-level and batch-level costs but not product-level costs.
C. Eliminating a business segment often allows a company to avoid some facility-level costs.
D. Facility-level costs generally are not relevant in special order decisions.
