Question :
Multiple Choice Questions
96. Which of the following would be least relevant : 1229588
Multiple Choice Questions
96. Which of the following would be least relevant in deciding whether to further process a joint product past the split-off point?
A. Incremental revenue earned from additional processing.
B. Incremental costs incurred as a result of additional processing.
C. Joint costs allocated to the joint product at the split-off point.
D. Customer demand for the product that emerges from additional processing.
97. Johnson produces 7,000 skateboards each month, which it sells for $60 each. Variable costs are $25 per unit, and fixed costs are $95,000 per month. A Canadian company has offered to buy an additional 1,000 skateboards for $30 per unit. Assuming that normal sales volume and fixed costs remain unchanged, filling this special order will cause Johnson’s operating income to:
A. Decrease by $30,000.
B. Decrease by $6,250.
C. Decrease by $5,000.
D. Increase by $5,000.
98. ILF makes 2,000 waterproof mattresses annually to be used in one of its products. The unit cost of the mattresses includes variable costs of $45 and fixed costs of $30. If the mattresses were purchased from an outside supplier, 60% of the fixed costs could be eliminated. Buying mattresses from an outside supplier at a price of $50 each would cause ILF’s operating income to:
A. Increase by $26,000.
B. Increase by $30,000.
C. Increase by $6,000.
D. Decrease by $10,000.
99. The decision to rework a defective branch of products will improve net income whenever the incremental revenue earned as a result of the decision exceeds:
A. The variable costs of reworking the batch.
B. The incremental cost of reworking the batch.
C. The average cost per unit associated with reworking the batch.
D. The cash expenditure to rework the batch.
100. Which of the following costs is generally considered irrelevant in incremental analysis?
A. Sunk costs.
B. Out-of-pocket costs.
C. Incremental costs.
D. Opportunity costs.
101. When constrained by a limiting resource, managers often seek to produce those products which have:
A. The highest selling prices.
B. The lowest average cost per unit.
C. The highest contribution margin per unit of limiting resource.
D. The highest contribution margin ratios.
102. The average total cost of producing Z-12 is $35 per unit. The average variable cost associated with the production of Z-12 is $12 per unit, of which $2 is manufacturing overhead. The normal selling price of Z-12 is $50 per unit. If excess capacity exists, a special order for Z-12 will increase net operating income if it is priced at least:
A. $50 per unit.
B. $35 per unit.
C. $12 per unit.
D. $10 per unit.
103. When deciding whether to make or buy a component part, the most relevant consideration is often:
A. The average total cost of making the part.
B. The unavoidable fixed manufacturing costs.
C. The variable manufacturing costs per unit.
D. The sunk cost of equipment used to manufacture the part.
104. Products for which sales of one contribute to the sales of another are called:
A. Complementary products.
B. Joint products.
C. Common products.
D. Dependent products.
105. Opportunity costs represent:
A. Cash expenditures for business opportunities.
B. Benefits foregone.
C. Costs avoided by making a particular decision.
D. Indirect costs typically classified as manufacturing overhead.
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