FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 20: Incremental Analysis

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

The focus of a sell or process further decision is

A) incremental revenue.
B) incremental cost.
C) both incremental revenue and incremental cost.
D) neither incremental revenue nor incremental cost.

E) C) and D)
F) None of the above

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

Incremental analysis is most useful

A) in developing relevant information for management decisions.
B) in choosing between capital budgeting methods.
C) in evaluating the master budget.
D) as a replacement technique for variance analysis.

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 63

True/False

Review LaterAdd Note

Accountants are mainly involved in developing nonfinancial information for management's consideration in choosing among alternatives.

Instructions Prepare an analysis showing whether the old machine should be retained or replaced.

The decision rule on whether to sell or process further

If a company is operating at less than capacity, the incremental costs of a special order will likely include variable manufacturing costs, but not fixed costs.

A decision whether to continue to make a product or buy it externally depends on the external price and the amount of variable and fixed costs that can be eliminated assuming no alternative uses of resources.

Book value of old equipment is considered to be a

Use the following information for questions . Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected: If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. -What is the net cost of the new equipment?

Ruth Company produces 1,000 units of a necessary component with the following costs: None of Ruth Company's fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $8,000 if the components were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Ruth Company would be willing to accept to acquire the 1,000 units externally?

A cost that cannot be changed by any present or future decision is a(n)

Opportunity cost must be considered in decisions involving

Use the following information for questions . Paul Bunyon Lumber Co. produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period: -Which products should be processed further?

Which of the following is not relevant information in a decision whether old equipment presently being used should be replaced by new equipment?

The cash disposal value of old equipment is considered to be a (an)

In a make-or-buy decision, which costs can be considered relevant?

Which of the following is not involved in the sell or process further decision?

Incremental analysis would not be appropriate for

Each of the following is a disadvantage of buying rather than making a component of a company's product except that

Match the items below by entering the appropriate code letter in the space provided. A. Incremental analysis B. Opportunity cost C. Sunk cost ____ 1. A cost that cannot be changed by any present or future decision. ____ 2. The process of identifying the financial data that change under alternative courses of action. ____ 3. The potential benefit that may be lost from following an alternative course of action.