Question : 101.If a decision must be made to close a warehouse, : 1169319

 

 

101.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.

 

 

 

 

102.Direct costing differs from absorption costing in that   

A. under direct costing all fixed overhead is expensed in the current period.

 

B. under absorption costing all fixed manufacturing overhead is expensed in the current period.

 

C. under direct costing a portion of the fixed manufacturing overhead is included in the finished goods inventory.

 

D. under absorption costing an increase in finished goods inventory does not affect the amount of fixed costs expensed.

 

 

 

 

103.Company A’s inventory increased 400 units over the prior year end. Its variable manufacturing costs are $5 per unit and fixed costs for the period were $250,000. During the current year, Company A produced 12,500 units. Absorption costing net income will be:   

A. $20,000 higher than direct costing net income.

 

B. $8,000 higher than direct costing net income.

 

C. $8,000 lower than direct costing net income.

 

D. $20,000 lower than direct costing net income.

 

 

 

104.When the balance in ending finished goods inventory increases, net income under absorption costing   

A. is lower than under direct costing.

 

B. is higher than under direct costing.

 

C. is the same under direct costing.

 

D. is unaffected by the increase.

 

 

 

 

105.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

 

 

 

 

106.What is the differential cost of Alternative Y over Alternative X in the example below?     

A. $142,000.

 

B. $103,000.

 

C. $93,000.

 

D. $39,000.

 

 

 

107.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

 

 

 

 

108.Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder. An outside supplier has offered to sell Green all of these parts for $48 a unit. If the parts were purchased from the supplier, all of the direct labor costs would be avoided as well as $5 of manufacturing overhead costs per unit. Product cost information for the part under review follows:  How much of the unit product cost is relevant in the decision of whether to make or buy the part?   

A. $15.

 

B. $25.

 

C. $40.

 

D. $45.

 

 

 

109.Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder. An outside supplier has offered to sell Green all of these parts for $48 a unit. If the parts were purchased from the supplier, all of the direct labor costs would be avoided as well as $5 of manufacturing overhead costs per unit. Product cost information for the part under review follows:  If Green has no other use for the space vacated by the decision to purchase the part from the outside supplier, what is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?   

A. $210,000.

 

B. $60,000.

 

C. ($210,000).

 

D. ($90,000)

 

 

 

 

 

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