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    Multiple choice - Accounting Problems

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    A) Irrelevant costs include costs that are:
    1 different among alternatives.
    2 avoidable.
    3 sunk.
    4 opportunity costs.

    b) The difference in total costs between two alternatives is referred to as the:
    1 direct cost.
    2 incremental cost.
    3 sunk cost.
    4 opportunity cost.

    c) The purpose of incremental analysis is to find the alternative:
    1 that contributes the most to operating income.
    2 that brings in the most revenue.
    3 with the lowest fixed costs.
    4 with the fewest relevant costs.

    d) In a special-order decision, which of the following costs would normally be irrelevant?
    1 Packaging costs
    2 Direct labor
    3 Variable overhead
    4 Fixed selling expenses

    e) Avoidable costs are important for:
    1 product mix decisions.
    2 sell or process-further decisions.
    3 decisions to eliminate unprofitable segments.
    4 pricing decisions for special orders.

    f) Direct costs include:
    1 all product costs.
    2 variable product costs.
    3 some identifiable fixed costs and variable product costs.
    4 some identifiable fixed costs.

    g) As a general rule, a segment should not be eliminated if:
    1 the company is profitable.
    2 its direct fixed costs exceed its contribution margin.
    3 the segment's fixed costs equal its variable costs.
    4 its contribution margin exceeds direct fixed costs.

    h) The point at which products are separated in a joint production process is the:
    1 split-off point.
    2 joint product point.
    3 separation point.
    4 breakeven point.

    i) Relevant costs in a sell or process-further decision include:
    1 costs of additional processing.
    2 both additional revenues and additional costs.
    3 revenues after additional processing.
    4 joint product costs.

    j) The objective of the sell or process-further decision is to:
    1 maximize production.
    2 maximize joint costs.
    3 minimize processing.
    4 maximize operating income

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    Solution Preview

    a) - sunk.
    b) - opportunity cost
    c) - that contributes the most to operating income
    d) - Fixed ...

    Solution Summary

    The solution answers multiple choice question related to irrelevant cost,total cost,incremental analysis,avoidable cost,direct cost,split off point,relevant cost.