6: Costs and Special Order
Page 1 of 59
6
Student: _______________________________________________________________________________________
1. All of the following statements describe qualities of relevance except:
A.
B.
C.
D.
Relevant information is future oriented.
Relevant information differs between the alternatives.
Relevant information requires a high degree of precision.
Relevant information includes qualitative as well as quantitative data.
2. Select the correct statement regarding relevant costs and revenues.
A. Relevant costs are also known as avoidable costs.
B. Relevant costs are future-oriented.
C. Relevant revenues must differ between the alternatives.
D. All of the above.
3. Andy is trying to decide which one of two job offers he will accept. Several items are presented below:
Select the items that are relevant to Andy's decision.
A. (1), (2), (3), (4), (5)
B. (2), (3), (4)
C. (1), (3), (5)
D. (2), (4)
4. Alicia brought her lunch today but now a co-worker has asked her to go to the deli across the street. Select the correct statement from the following. A. The cost of the lunch Alicia already has is relevant to Alicia's decision to have lunch with her friend.
B. The cost of the lunch Alicia already has represents the opportunity cost of dining with her friend.
C. The cost to buy lunch at the deli is not relevant because it has not yet been incurred.
D. The cost of the lunch that Alicia brought has nothing to do with her current decision.
5. Select the incorrect statement regarding relevant revenues.
A.
B.
C.
D.
Relevant revenues must differ between the alternatives being considered.
Past or future revenues may be relevant.
Relevant revenues must make a difference in the decision under consideration.
Relevant revenues are identified in the same way as relevant costs.
6. Brannon Company plans to add a new item to its line of consumer product offerings. Two possible products are under consideration. Each unit of Product A costs $12 to produce and has a contribution margin
6
Student: _______________________________________________________________________________________
1. All of the following statements describe qualities of relevance except:
A.
B.
C.
D.
Relevant information is future oriented.
Relevant information differs between the alternatives.
Relevant information requires a high degree of precision.
Relevant information includes qualitative as well as quantitative data.
2. Select the correct statement regarding relevant costs and revenues.
A. Relevant costs are also known as avoidable costs.
B. Relevant costs are future-oriented.
C. Relevant revenues must differ between the alternatives.
D. All of the above.
3. Andy is trying to decide which one of two job offers he will accept. Several items are presented below:
Select the items that are relevant to Andy's decision.
A. (1), (2), (3), (4), (5)
B. (2), (3), (4)
C. (1), (3), (5)
D. (2), (4)
4. Alicia brought her lunch today but now a co-worker has asked her to go to the deli across the street. Select the correct statement from the following. A. The cost of the lunch Alicia already has is relevant to Alicia's decision to have lunch with her friend.
B. The cost of the lunch Alicia already has represents the opportunity cost of dining with her friend.
C. The cost to buy lunch at the deli is not relevant because it has not yet been incurred.
D. The cost of the lunch that Alicia brought has nothing to do with her current decision.
5. Select the incorrect statement regarding relevant revenues.
A.
B.
C.
D.
Relevant revenues must differ between the alternatives being considered.
Past or future revenues may be relevant.
Relevant revenues must make a difference in the decision under consideration.
Relevant revenues are identified in the same way as relevant costs.
6. Brannon Company plans to add a new item to its line of consumer product offerings. Two possible products are under consideration. Each unit of Product A costs $12 to produce and has a contribution margin