Costs: Relevant, Differential, Avoidable
1. The cost of a computer system installed last year is an example of: (Points: 2) a sunk cost a relevant cost a differential cost an avoidable cost
2. In evaluating different alternatives, it is useful to concentrate on: (Points: 2) variable costs fixed costs total costs relevant costs
3. Relevant costs in a make-or-buy decision of a part include: (Points: 2) setup overhead costs for the manufacture of the product using the outsourced part currently used manufacturing capacity that has alternative uses when part is outsourced annual plant insurance costs that will remain the same corporate office costs that will be allocated differently
4. The following information applies to Questions 7 and 8.
Jim 's 5-year-old Geo Prizm requires repairs estimated at $3,000 to make it roadworthy again. His friend, Julie, suggested that he should buy a 5-year-old used Honda Civic instead for $3,000 cash. Julie estimated the following costs for the two cars:
Geo Prizm Honda Civic
Acquisition cost $15,000 $3,000
Repairs $ 3,000 ---
Annual operating costs
(Gas, maintenance, insurance)
$ 2,280 $2,100
The cost(s) NOT relevant for this decision is(are): (Points: 2) the acquisition cost of the Geo Prizm the acquisition cost of the Honda Civic the repairs to the Geo Prizm the annual operating costs of the Honda Civic
5. Employee morale at Dos Santos, Inc., is very high. This type of information is known as: (Points: 2) a qualitative factor a quantitative factor a differential factor an opportunity cost
6. Characteristics of a product layout include: (Points: 2) raw materials and purchased parts are delivered directly to the production line where they are needed low-volume production a U-shaped layout small batches of unique products
2. In evaluating different alternatives, it is useful to concentrate on: (Points: 2) variable costs fixed costs total costs relevant costs
3. Relevant costs in a make-or-buy decision of a part include: (Points: 2) setup overhead costs for the manufacture of the product using the outsourced part currently used manufacturing capacity that has alternative uses when part is outsourced annual plant insurance costs that will remain the same corporate office costs that will be allocated differently
4. The following information applies to Questions 7 and 8.
Jim 's 5-year-old Geo Prizm requires repairs estimated at $3,000 to make it roadworthy again. His friend, Julie, suggested that he should buy a 5-year-old used Honda Civic instead for $3,000 cash. Julie estimated the following costs for the two cars:
Geo Prizm Honda Civic
Acquisition cost $15,000 $3,000
Repairs $ 3,000 ---
Annual operating costs
(Gas, maintenance, insurance)
$ 2,280 $2,100
The cost(s) NOT relevant for this decision is(are): (Points: 2) the acquisition cost of the Geo Prizm the acquisition cost of the Honda Civic the repairs to the Geo Prizm the annual operating costs of the Honda Civic
5. Employee morale at Dos Santos, Inc., is very high. This type of information is known as: (Points: 2) a qualitative factor a quantitative factor a differential factor an opportunity cost
6. Characteristics of a product layout include: (Points: 2) raw materials and purchased parts are delivered directly to the production line where they are needed low-volume production a U-shaped layout small batches of unique products