Question : 51.              Which of the following a true statement about cost : 1311769

 

 

51.              Which of the following is a true statement about cost behaviors in incremental analysis?

1.Fixed costs will not change between alternatives.

2.Fixed costs may change between alternatives.

3.Variable costs will always change between alternatives.

a.1

b.2

c.3

d.2 and 3

 

 

52.              A company is considering the following alternatives:

Alternative 1Alternative 2

Revenues$120,000$120,000

Variable costs60,00070,000

Fixed costs35,00035,000

Which of the following are relevant in choosing between the alternatives?

a.Variable costs

b.Revenues

c.Fixed costs

d.Variable costs and fixed costs

 

 

53.              It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what will be the effect on net income?

a.$6,000 increase

b.$6,000 decrease

c.$9,000 decrease

d.$45,000 increase

 

 

54.              Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

a.Income would decrease by $8,000.

b.Income would increase by $8,000.

c.Income would increase by $140,000.

d.Income would increase by $40,000.

 

 

55.              In incremental analysis,

a.costs are not relevant if they change between alternatives.

b.all costs are relevant if they change between alternatives.

c.only fixed costs are relevant.

d.only variable costs are relevant.

 

 

56.              If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then

a.only variable costs are relevant.

b.fixed costs are not relevant.

c.the order will likely be accepted.

d.the order will likely be rejected.

 

 

57.              Miley, Inc. has excess capacity. Under what situations should the company accept a special order for less than the current selling price?

a.Never

b.When additional fixed costs must be incurred to accommodate the order

c.When the company thinks it can use the cheaper materials without the customer’s knowledge

d.When incremental revenues exceed incremental costs

 

 

58.              If a company must expand capacity to accept a special order, it is likely that there will be

a.an increase in unit variable costs.

b.no increase in fixed costs.

c.an increase in variable and fixed costs per unit.

d.an increase in fixed costs.

 

 

59.              Which of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity?

a.Net income will not be affected.

b.Net income will increase if the special sales price per unit exceeds the unit variable costs.

c.Net income will decrease.

d.Additional fixed costs will probably be incurred.

 

 

60.              If a company anticipates that other sales will be affected by the acceptance of a special order, then

a.lost sales should be considered in the incremental analysis.

b.lost sales should not be considered in the incremental analysis.

c.the order should not be accepted.

d.the order will only be accepted if the plant is below capacity.