Question :
43.Sunk costs:
A. Have already been incurred as a result of past : 1259662
43.Sunk costs:
A. Have already been incurred as a result of past actions.
B. Vary among the alternative courses of action being considered.
C. Are benefits that could have been obtained by following another course of action.
D. Result from unfavorable cost variances.
44.Which factor is not relevant in deciding whether or not to accept a special order?
A. Incremental revenue that will be earned.
B. Additional costs that will be incurred.
C. The effect that the order will have on the company’s regular sales volume and selling prices.
D. The average cost of production if the special order is accepted.
45.Accepting a special order is profitable whenever the revenue from the special order exceeds:
A. The average unit cost of production multiplied by the number of units in the order.
B. The incremental cost of producing the order.
C. The materials and direct labor costs of producing the order.
D. The fixed manufacturing costs for the period.
46.In deciding whether or not to accept a special order, what is the opportunity cost of using machinery for which the firm has sufficient excess capacity to accept the order?
A. The historical cost of the machinery.
B. The undepreciated cost of the machinery.
C. The same machinery cost allocated to regular production orders.
D. Zero.
47.Refer to the information above. Which of the following is not a relevant factor in Burns’ decision concerning whether to accept the special order from Allen?
A. The opportunity cost involved in accepting Allen’s order.
B. The incremental cost of manufacturing an additional 5,000 saws per month.
C. The $65 average cost per unit to manufacture a power saw.
D. Where and at what price Allen intends to sell the saws.
48.Refer to the information above. Assume that Allen Distributors offers to purchase the additional 5,000 saws at a price of $47 per unit. If Burns accepts this price, Burns’ monthly gross profit on sales of power saws will:
A. Increase by $35,000.
B. Increase by $185,000.
C. Decrease by $40,000.
D. Decrease by $240,000.
49.Refer to the information above. Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least:
A. $20.
B. $50.
C. $80.
D. $40.
50.Refer to the information above. Burns decides to accept the special order for 5,000 units from Allen at a unit sales price that will add $100,000 per month to its operating income. The unit price Burns charging Allen is:
A. $20.80.
B. $60.00.
C. $62.50.
D. $55.00.
51.Refer to the information above. If Joan Reid’s order is rejected, what will be John Boyd’s average unit cost of manufacturing each motor?
A. $68 per unit.
B. $70 per unit.
C. $96 per unit.
D. Some other amount.
52.Refer to the information above. What is the incremental cost of producing each additional motor?
A. $29 per unit.
B. $69 per unit.
C. $95 per unit.
D. Some other amount.
