ACC 561 Week 6 Quiz
1. A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to
• provide relevant revenue and cost data about each course of action.
• determine the amount of money that should be spent on a project.
• decide which actions that management should consider.
• assign responsibility for the decision.
2. In incremental analysis,
• only costs are analyzed.
• only revenues are analyzed.
• both costs and revenues may be analyzed.
• both costs and revenues that stay the same between alternate courses of action will be analyzed.
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3. Incremental analysis is most useful
• as a replacement technique for variance analysis.
• in evaluating the master budget.
• in developing relevant information for management decisions.
• in choosing between the net present value method and the internal rate of return method.
4. It costs Ross Co. $24 of variable and $10 of fixed costs to produce one bathroom scale which normally sells for $70. A foreign wholesaler offers to purchase 2,000 scales at $30 each. Ross would incur special shipping costs of $2 per scale if the order were accepted. Ross has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?
• $8,000 decrease
• $12,000 decrease
• $60,000 increase
• $8,000 increase
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5. Carter, Inc. can make 100 units of a necessary component part with the following costs:
Direct Materials $120,000
Direct Labor 20,000
Variable Overhead 60,000
Fixed Overhead 40,000
If Carter purchases the component externally, $30,000 of the fixed costs can be avoided. At what external price for the 100 units is the company indifferent between making or buying?
6. Mink Manufacturing is unsure of...