Question :
56. A segment of a business reported a contribution margin of : 1197814
56. A segment of a business reported a contribution margin of $36,000 and controllable fixed costs of $12,000. If the segment had been eliminated, the company-wide net income would have been
A. $12,000 higher.
B. $24,000 lower.
C. $36,000 lower.
D. $24,000 higher.
57. A segment of a business reported a contribution margin of $36,000 and common costs of $12,000. If the segment had been eliminated, the company-wide net income would have been
A. $12,000 higher.
B. $24,000 lower.
C. $36,000 lower.
D. $24,000 higher.
58. Contribution margin is calculated by
A. deducting variable costs from revenue.
B. deducting variable costs and controllable fixed costs from revenue.
C. deducting variable costs and common costs from revenue.
D. deducting fixed costs from revenue.
59. A segment of a business probably should be discontinued if
A. its common costs exceed its contribution margin.
B. its contribution margin exceeds its controllable fixed costs and its common costs.
C. it cannot produce a contribution margin.
D. it has a net loss.
60. Costs that are not directly traceable to a segment of a business are called
A. sunk costs.
B. common costs.
C. fixed costs.
D. incremental costs.
61. If a decision must be made to close a warehouse, non-refundable prepaid rent on the warehouse is
A. an opportunity cost.
B. a common cost.
C. a sunk cost.
D. a variable cost.
62. Which of the following is not relevant in decision making?
A. opportunity costs
B. differential costs
C. sunk costs
D. variable costs
63. Which of the following cost amounts can be found in a firm’s accounting records?
A. opportunity costs
B. differential costs
C. incremental costs
D. sunk costs
64. Which of the following would not be relevant to a decision about whether to continue making a part or whether to buy it from an outside supplier?
A. alternative uses for the plant where the part was produced if the part is purchased
B. a fee previously spent for design of the part
C. the variable costs of making the part
D. the number of additional employees needed to make the part
65. In making a decision to replace a machine, which of the following is not relevant?
A. the training that workers will need in order to use the new machine
B. the variable costs of operating the new machine
C. the variable costs of operating the old machine
D. the book value of the old machine
66. Which of the following is NOT a consideration regarding the purchase of new equipment when looking at the net income under each alternative?
A. depreciation expense per year on the new equipment
B. annual sales
C. differential labor costs
D. additional fixed costs under an alternative
67. Which of the following is NOT a consideration regarding a special order?
A. If the company has sufficient capacity
B. If the special order jeopardized sales to existing customers
C. Federal laws regarding the price
D. Whether employee morale would be affected
68. Which of the following is NOT a consideration when determining whether to continue making a part or to buy that part?
A. the timing of the cash receipts and expenditures
B. the opportunity cost
C. the impact on employees
D. the sunk cost
69. Which of the following should NOT be a consideration when deciding whether to make or buy a part?
A. differential fixed costs
B. opportunity costs
C. sunk costs
D. capacity costs
70. Which of the following should NOT be a consideration when deciding whether to make or buy a part?
A. impact on quality of the part under each set of circumstances
B. impact on factory employee morale
C. impact on continued supply of the part
D. impact on sales to existing customers
