Q1-5 posted

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					1. Costs that change between alternatives are called (Points: 3)
    fixed costs.
    opportunity costs.
    relevant costs.
    sunk costs.


2. A cost incurred in the past that cannot be changed by any future action is a(n)
(Points: 3)
    opportunity cost.
    sunk cost.
    relevant cost.
    avoidable cost.


3. Which statement is true about relevant costs in incremental analysis? (Points: 3)
    All costs are relevant if they change between alternatives.
    Only fixed costs are relevant.
    Only variable costs are relevant.
    Relevant costs should be ignored.


4. Seville Company manufactures a product with a unit variable cost of $42 and a
unit sales price of $75. Fixed costs were $80,000 when 10,000 units were
produced and sold. The company has a one-time opportuity to sell an additional
2,000 units at $55 each in an international market which would not affect its
present sales. The company has sufficient capacity to produce the additional units.
How much is the relevant income effect of accepting the special order? (Points: 3)
     $84,000
     $40,000
     $26,000
     $10,000



5. Which statement is true of an opportunity cost? (Points: 3)
     It is the cost of a special order option.
     It is always variable.
     It is the potential benefit as a result of following an alternative course of
action.
     It is a sunk cost.

				
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posted:11/26/2011
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