When analysing a make-or-buy decision, costs that will be incurred regardless of the decision:Group of answer choicesare unavoidable and therefore should be ignored.are known as relevant costs.should be included in the decision.are known as incremental costs

For make-or-buy decisions, relevant costs include:Group of answer choicesdifferential costs plus fixed costsincremental costs plus differential costsincremental costs plus sunk costsincremental costs plus opportunity costs

The incremental cost of building the next unit of a good is called the:Group of answer choicesLaw of One Pricevariable costmarginal costfixed cost

A relevant cost is a cost that is a(n):Group of answer choicesfuture costnon-cash expensesunk costpast cost

Fill in the Blank QuestionFill in the blank question.Incremental or differential costs are costs in making decisions.

2. LO 10.1Which type of incurred costs are not relevant in decision-making (i.e., they have no bearing on future events) and should be excluded in decision-making?avoidable costsunavoidable costssunk costsdifferential costs3. LO 10.1The managerial decision-making process has which of the following as its third step?Review, analyze and evaluate the results of the decision.Decide, based upon the analysis, the best course of action.Identify alternative courses of action to achieve a goal or solve a problem.Perform a comprehensive differential (differential) analysis of potential solutions.4. LO 10.1Which of the following is not one of the five steps in the decision-making process?identify alternativesreview, analyze, and evaluate decisiondecide best actionconsult with CFO concerning variable costs5. LO 10.2Which of the following is sometimes referred to as the “Anti Chain Store Act”?Sarbanes-Oxley ActRobinson-Patman ActWright-Patman ActSecurities Act of 19396. LO 10.2Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shelf. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320,000. However, the $1.50 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order?Profits will decrease by $1,200.Profits will increase by $31,200.Profits will increase by $600.Profits will increase by $7,200.7. LO 10.3________ is the act of using another company to provide goods or services that your company requires.AllocatingOutsourcingSegmentingLeasing8. LO 10.3Which of the following is a disadvantage of outsourcing?freeing up capacityfreeing up capitaltransferring production and technology riskslimiting ability to upsize or downsize production9. LO 10.3Which of the following is not a qualitative decision that should be considered in an outsourcing decision?employee moraleproduct qualitycompany reputationrelevant costs10. LO 10.4Which of the following is one of the two approaches used to analyze data in the decision to keep or discontinue a segment?comparing contribution margins and fixed costscomparing contribution margins and variable costscomparing gross margin and variable costscomparing total contribution margin under each alternative11. LO 10.4When should a segment be dropped?only when the decrease in total contribution margin is less than the decrease in fixed costonly when the decrease in total contribution margin is equal to fixed costonly when the increase in total contribution margin is more than the decrease in fixed costonly when the decrease in total contribution margin is less than the decrease in variable cost12. LO 10.4Youngstown Construction plans to discontinue its roofing segment. Last year, this segment generated a contribution margin of $65,000 and incurred $70,000 in fixed costs. Discontinuing the segment will allow the company to avoid half of the fixed costs. What effect is expected to occur to the company’s overall profit?a decrease of $5,000a decrease of $30,000a decrease of $5,000an increase of $30,00013. LO 10.5Mallory’s Video Supply has changed its focus tremendously and as a result has dropped the selling price of DVD players from $45 to $38. Some units in the work-in-process inventory have costs of $30 per unit associated with them, but Mallory can only sell these units in their current state for $22 each. Otherwise, it will cost Mallory $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further?$5 per unit profit$16 per unit profit$3 per unit loss$12 per unit loss14. LO 10.6A company produces two products, E and F, in batches of 100 units. The production and cost data are:The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year?$216,000$204,000$12,000$54,00015. LO 10.6When operating in a constrained environment, which products should be produced?products with the highest contribution margin per unitproducts with the highest contribution margin per unit of the constrained processproducts with the highest selling priceproducts with the lowest allocated joint cost