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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Multiple-Choice Questions 8-3 through 8-5:

Sandy is considering moving from her apartment into a small house with a fenced yard. The apartment is noisy, and she has difficulty studying. In addition, the fenced yard would be great for her dog. The distance from school is about the same from the house and from the apartment. The apartment costs $750 per month, and she has 2 months remaining on her lease. The lease cannot be broken, so Sandy must pay the last 2 months of rent whether she lives there or not. The rent for the house is $450 per month, plus utilities, which should average $100 per month. The apartment is furnished; the house is not. If Sandy moves into the house, she will need to buy a bed, dresser, desk, and chair immediately. She thinks that she can pick up some used furniture for a good price.

8-4    Refer to the information for Sandy above. Which of the following is a qualitative factor?

  1. a. House rent of $450 per month
  2. b. Utilities for the house of $100 per month
  3. c. The noise in the apartment house
  4. d. The cost of the used furniture
  5. e. The last 2 months of rent in the apartment

To determine

Identify the option which represents the qualitative factors.

Explanation

Qualitative Factors:

Those factors that cannot be quantified easily are known as qualitative factors. The qualitative factors involve those factors that cannot be quantified in monetary terms such as political pressure and product safety.

c.

The noise in the apartment will be treated as a qualitative factor which influences Person S to shift from apartment to a small house. The noise in the apartment cannot be quantified in monetary terms. Therefore, this option is correct.

a.

The amount of $450 per month for the house rent will be considered as the relevant cost because it will affect the decisions of Person S in the future. Therefore, this option is incorrect.

b.

The utilities for the house of $100 per month are the additional costs that Person S will incur while shifting to the house from the apartment...

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