Contribution Margin; Sunk, Average, Incremental and Fixed Costs; Joint Products 36 A decision to dis
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Contribution Margin; Sunk, Average, Incremental and Fixed
Costs; Joint Products
36 A decision to discontinue a given product on the basis
of contribution margin data should include consideration of the probable impact
of the discontinuance on the sales of other products
a True
b False
37 Which of the following types of cost is always relevant
to a decision?
a Sunk costs
b Average costs
c Incremental costs
d Fixed costs
38 Which is an example of joint products?
a Sugar and beef
b Pens and erasers
c Granulated coal and methyl alcohol
d Iron and plastic
39 Accepting a special order is profitable whenever the
revenue from the special order exceeds:
a The average unit cost of production multiplied by the
number of
units in the order
b The incremental cost of producing the order
c The materials and direct labor costs of producing the
order
d The fixed manufacturing costs for the period
40 Computer City manufactured 100 personal computers at a
cost of $65,000 It can sell them as is for $100,000 or install hard disks in
them and sell them for $140,000 The $65,000 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
41 Products for which sales of one contribute to the sales
of another are called:
a Complementary products
b Competing products
c Contributory products
d Codependent products
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