Cost Relevant in Decision Making

Which of these are not relevant costs?

• Incremental and sunk

• Sunk and committed

• Committed and incremental

• Opportunity and committed

What is the opportunity cost of making a component part in a factory given no alternative use of the facility?

• The variable manufacturing cost of the component.

• The total manufacturing cost of the component.

• Zero

• The total variable cost of the component.

In Decision Analysis situation which one of the following costs is NOT relevant to the Decision?

• Historical Cost

• Incremental Cost

• Differential Cost

• Avoidable Cost

Relevant costs and revenues pertain to the past and incremental costs.

• False

• True

These are costs which would not be incurred if the activity to which they relate did not exist.

• True

• False

An additional cost that results from a particular course of action is known as a(an):

• sunk cost

• opportunity cost

• incremental cost

A cost incurred as a consequence of a past irrevocable decision and that, therefore, cannot be avoided, is known as a:

• decremental cost

• differential cost

• sunk cost

• opportunity cost

Which of the following is not a relevant cost in decision making?

• Opportunity cost

• Relevant benefits

• Avoidable costs

• Sunk costs

Given the following list of costs, which one should be ignored in a decision to produce additional units of product for a factory that is operating at less than 100% capacity, and the additional business will not use up the remainder of the plant capacity?

• Fixed administrative expenses

• Variable factory overhead

• Variable factory overhead

• Variable selling expenses

One-time-only special orders should only be accepted if

• incremental revenues exceed incremental costs

• differential revenues exceed variable costs

• incremental revenues exceed fixed costs

• total revenues exceed total costs