incremental analysis

In making decisions, management ordinarily considers both financial and nonfinancial information.

• True

• False

Decision-making involves choosing among alternative courses of action.

• True

• False

A special one-time order should never be accepted if the unit sales price is less than the unit variable cost.

• True

• False

If a company has excess capacity and present markets will not be affected, it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.

• True

• False

A company should never accept an order for its product at less than its regular sales price.

• True

• False

If a company is operating at less than capacity, the incremental costs of a special order will likely include variable manufacturing costs, but not fixed costs.

• True

• False

An incremental make-or-buy decision depends solely on which alternative is the lowest cost alternative.

• True

• False

A decision whether to continue to make a product or buy it externally depends on the external price and the amount of variable and fixed costs that can be eliminated assuming no alternative uses of resources.

• True

• False

An opportunity cost is the potential benefit obtained by using resources in an alternative course of action.

• True

• False

Many of the decisions involving incremental analysis have qualitative features, but since they are not easily measured they should be ignored.

• True

• False