Question : Multiple Choice Questions 33.Perfect Plumbing Corporation currently manufactures a valve for : 1259661

 

Multiple Choice Questions 

33.Perfect Plumbing Corporation currently manufactures a valve for use in water pumps that it produces for sale. The company is considering purchasing the valves from an outside supplier rather than manufacturing them. Which of the following costs is not relevant to the decision?   

A. The cost of direct material required to make the valve.

 

B. The price charged by the outside supplier for an identical valve.

 

C. The cost of the machinery owned by Perfect Plumbing used exclusively to manufacture this valve.

 

D. The salvage value of the machinery owned by Perfect Plumbing used exclusively to manufacture this valve.

 

 

 

 

34.Incremental revenues:   

A. Always increase revenue when one course of action is selected over another.

 

B. Always decrease revenue when one course of action is selected over another.

 

C. May increase or decrease when one course of action is selected over another.

 

D. Cause revenues to remain steady.

 

 

 

 

35.Which of the following types of cost are always relevant to a decision?   

A. Sunk costs.

 

B. Average costs.

 

C. Incremental costs.

 

D. Fixed costs.

 

 

 

 

36.Mell Co. manufactured 100 personal computers at a cost of $30,000. It can sell them as is for $65,000, or install hard disks in them for $25,000 and sell them for $105,000. The $30,000 original manufacturing cost is:   

A. An out-of-pocket cost because it has already been paid.

 

B. A sunk cost because it is not relevant to the decision.

 

C. An incremental cost because it is relevant to the decision.

 

D. A fixed cost because it will remain the same no matter which action is taken.

 

 

 

 

37.Which cost is not relevant in making financial decisions?   

A. Sunk costs.

 

B. Opportunity costs.

 

C. Incremental costs.

 

D. Out-of-pocket costs.

 

 

 

 

38.Incremental costs can be defined as:   

A. Costs that are expected to increase regardless of the course of action chosen.

 

B. The differences between costs incurred under alternative courses of action.

 

C. Costs incurred in the past.

 

D. Costs that are irrelevant in decision making.

 

 

 

 

39.A cost that has already been incurred and cannot be changed is called a(n):   

A. Opportunity cost.

 

B. Out-of-pocket cost.

 

C. Joint cost.

 

D. Sunk cost.

 

 

 

 

40.Costs that have not yet been incurred and that may vary among different courses of action are called:   

A. Opportunity costs.

 

B. Out-of-pocket costs.

 

C. Joint costs.

 

D. Sunk costs.

 

 

 

 

41.By choosing to go into business for himself, Jim Lazar foregoes the possibility of getting a highly paid job with a large company. This is called a(n):   

A. Sunk cost.

 

B. Out-of-pocket cost.

 

C. Opportunity cost.

 

D. Joint cost.

 

 

 

 

42.Which of the following would be an example of a sunk cost?   

A. The cost of a new oil burner that replaced a destroyed one.

 

B. The cost of an old inefficient oil burner that will be replaced by a more modern and efficient one.

 

C. Depreciation expense.

 

D. Lost revenue from a bad debt.