MGT202 Midterm Exam 2

(TRUE OR FALSE) All past costs are irrelevant.

(TRUE OR FALSE) If a company is operating at a FULL capacity, a special order may be accepted if revenues are greater than variable costs and related opportunity costs.

(TRUE OR FALSE) If a company is operating at an EXCESS capacity, a special order may be accepted if revenues are greater than variable costs.

(TRUE OR FALSE) Costs incurred in the past can be considered as relevant costs.

(TRUE OR FALSE) As a general guide, it is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs.

(TRUE OR FALSE) Joint costs are irrelevant in the decision of whether to sell a joint product at the split-off point or process it further and then sell it.

(TRUE OR FALSE) When a company has a production constraint, total contribution margin will be maximized by emphasizing the products with the highest contribution margin per unit.

(TRUE OR FALSE) Opportunity costs represent economic benefits that are forgone as a result of pursuing some course of action.

(TRUE OR FALSE) All future costs, even if they don't differ between alternatives, are considered relevant.

(TRUE OR FALSE) The purchase price of the new vehicle is an example of an opportunity cost.