6: Costs and Special Order

23509 WordsMar 31, 201595 Pages
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.…show more content…
C. Opportunity costs are always present. Page 3 of 59 D. Information does not have to be precisely accurate in order to be relevant. 14. Select the correct statement regarding relevant costs and revenues. A. To be relevant, a cost or revenue must be future-oriented and must differ between the alternatives. B. Sunk costs are relevant for decision-making purposes. C. Differential revenues are expected future revenues that do not vary between the alternatives under consideration. D. Avoidable costs are also known as sunk costs. 15. Select the incorrect statement regarding sunk costs. A. B. C. D. Sunk costs cannot be avoided. Sunk costs are relevant if they differ between the alternatives. Sunk costs are costs that have been incurred in past transactions. Sunk costs include historical costs such as equipment acquisition costs. 16. Robert is deciding whether to remain in the home he has lived in for the past ten years, which is located very near his work, or to move into a newer home that is located in the suburbs further from his job. The old house was purchased for $140,000 and has a market value of $200,000. The new home can be purchased for $275,000. Which of the following is not relevant to Robert's decision? A. B. C. D. Driving distance to work Cost of the new house Market value of the old house Cost of the old house 17. St. Augustine Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with

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