Question : 43.The potential benefits lost by taking a specific action when : 1236826

43.The potential benefits lost by taking a specific action when two or more alternative choices are available is known as a(n):   

A.Alternative cost.

B.Sunk cost.

C.Out-of-pocket cost.

D.Differential cost.

E.Opportunity cost.

44.A cost that requires a future outlay of cash, and is relevant for current and future decision making, is a(n):   

A.Out-of-pocket cost.

B.Sunk cost.

C.Opportunity cost.

D.Operating cost.

E.Uncontrollable cost.

45.A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called a(n):   

A.Uncontrollable cost.

B.Incremental cost.

C.Opportunity cost.

D.Out-of-pocket cost.

E.Sunk cost.

46.A company paid $200,000 ten years ago for a specialized machine that has no salvage value and is being depreciated at the rate of $10,000 per year. The company is considering using the machine in a new project that will have incremental revenues of $28,000 per year and annual cash expenses of $20,000. In analyzing the new project, the $200,000 original cost of the machine is an example of a(n):   

A.Incremental cost.

B.Opportunity cost.

C.Variable cost.

D.Sunk cost.

E.Out-of-pocket cost.

47.An additional cost incurred only if a company pursues a particular course of action is a(n):   

A.Period cost.

B.Pocket cost.

C.Discount cost.

D.Incremental cost.

E.Sunk cost.

48.A company is considering a new project that will cost $19,000. This project would result in additional annual revenues of $6,000 for the next 5 years. The $19,000 cost is an example of a(n):   

A.Sunk cost.

B.Fixed cost.

C.Incremental cost.

D.Uncontrollable cost.

E.Opportunity cost.

49.Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A salvage company will purchase the defective units as they are for $3 each. Gordon’s production manager reports that the defects can be corrected for $5 per unit, enabling them to be sold at their regular market price of $12.50. Gordon should:    

A.Sell the watches for $3 per unit.

B.Correct the defects and sell the watches at the regular price.

C.Sell the watches as they are because repairing them will cause their total cost to exceed their selling price.

D.Sell 5,000 watches to the salvage company and repair the remainder.

E.Throw the watches away.

50.Chang Industries has 2,000 defective units of product that have already cost $14 each to produce. A salvage company will purchase the defective units as they are for $5 each. Chang’s production manager reports that the defects can be corrected for $6 per unit, enabling them to be sold at their regular market price of $21. Chang should:    

A.Throw the units away.

B.Sell the units to the salvage company for $5 per unit.

C.Sell the units as they are because repairing them will cause their total cost to exceed their selling price.

D.Sell 1,000 units to the salvage company and repair the remainder.

E.Correct the defects and sell the units at the regular price.

51.Chang Industries has 2,000 defective units of product that have already cost $14 each to produce. A salvage company will purchase the defective units as they are for $5 each. Chang’s production manager reports that the defects can be corrected for $6 per unit, enabling them to be sold at their regular market price of $21. The incremental income or loss on reworking the units is:    

A.$20,000 loss.

B.$20,000 income.

C.$12,000 loss.

D.$32,000 income.

E.$30,000 income.

52.Product A requires 5 machine hours per unit to be produced, Product B requires only 3 machine hours per unit, and the company’s productive capacity is limited to 240,000 machine hours. Product A sells for $16 per unit and has variable costs of $6 per unit. Product B sells for $12 per unit and has variable costs of $5 per unit. Assuming the company can sell as many units of either product as it produces, the company should:    

A.Produce only Product A.

B.Produce only Product B.

C.Produce equal amounts of A and B.

D.Produce A and B in the ratio of 62.5% A to 37.5% B.

E.Produce A and B in the ratio of 40% A and 60% B.