Question :
21. Which of the following statements true? A. Fixed costs never relevant for : 1208241
21. Which of the following statements is true?
A. Fixed costs are never relevant for decision making.
B. Opportunity costs are never relevant to decision making.
C. Information does not have to be exactly accurate to be relevant to decision making.
D. A cost that is relevant in one decision context is relevant in other decision contexts.
22. Espy Company is trying to decide between the following two alternatives:
Which of the following conclusions can be drawn from this example?
A. Variable costs are always relevant for decision making.
B. Fixed costs are sunk and thus are never relevant for decision making.
C. Relevant costs may include variable costs and fixed costs.
D. None of the other answers are correct.
23. Colson-Howard Company operates a store in downtown Savannah that has five departments including a sporting goods department. If the sporting goods department is closed, the store manager’s position will not be affected, but if the entire store is closed, the manager will be terminated. Which of the following lessons should be learned from this example?
A. Relevance of costs is context sensitive.
B. Sunk costs cannot be avoided.
C. Opportunity costs are always present.
D. Information does not have to be precisely accurate in order to be relevant.
24. Select the correct statement regarding relevant costs and revenues.
A. To be relevant, a cost or revenue must be future-oriented and must differ between the alternatives.
B. Sunk costs are relevant for decision-making purposes.
C. Differential revenues are expected future revenues that do not vary between the alternatives under consideration.
D. Avoidable costs are also known as sunk costs.
25. Select the incorrect statement regarding sunk costs.
A. Sunk costs cannot be avoided.
B. Sunk costs are relevant if they differ between the alternatives.
C. Sunk costs are costs that have been incurred in past transactions.
D. Sunk costs include historical costs such as equipment acquisition costs.
26. Robert is deciding whether to remain in the home he has lived in for the past ten years, which is located very near his work, or to move into a newer home that is located in the suburbs further from his job. The old house was purchased for $140,000 and has a market value of $200,000. The new home can be purchased for $275,000. Which of the following is not relevant to Robert’s decision?
A. Driving distance to work
B. Cost of the new house
C. Market value of the old house
D. Cost of the old house
27. St. Augustine Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below:
Which of these amounts is relevant for the selection of one contract over another?
A. Contract revenue and cost of materials
B. Materials, consulting advice and allocated overhead
C. Cost of consulting advice and allocated overhead
D. Contract revenue and labor costs
28. Frank is trying to decide which one of two job offers he will accept. Several items are presented below:
Which of the above items would be considered sunk costs?
A. (1), (3), (5)
B. (2), (4)
C. (5)
D. None of the other answers are correct.
29. Select the correct statement regarding relevant costs and revenues.
A. Sunk costs are not relevant for decision-making purposes.
B. Relevant costs are frequently called unavoidable costs.
C. Direct labor is an example of a batch-level cost.
D. Only variable costs are relevant for decision making.
30. Expected future revenues that differ among the alternatives under consideration are often referred to as:
A. Alternative revenues.
B. Differential revenues.
C. Relative revenues.
D. Sunk revenues.
