Decision-Making Process Quiz

What is the first step in the decision-making process?

• Determine the decision alternatives

• Evaluate the costs and benefits of the alternatives

• Identify the decision problem

• Make the decision

Which step involves evaluating the costs and benefits of the alternatives?

• Step 1

• Step 2

• Step 3

• Step 4

What is the final step in the decision-making process?

• Make the decision

• Review the results of the decision

• Identify the decision problem

• Determine the decision alternatives

What are relevant costs also known as?

• Fixed costs

• Sunk costs

• Differential, incremental, or avoidable costs

• Overhead costs

Which of the following is a criterion for relevant cost classification?

• Must occur in the past

• Must be the same across all alternatives

• Must occur in the future

• Must be a fixed cost

Relevant costs must differ between what?

• Different time periods

• Decision alternatives

• Various departments

• Budget constraints

What are irrelevant costs?

• Costs that do not have the potential to influence a decision.

• Costs that are crucial for decision-making.

• Costs that vary with each decision.

• Costs that are future-oriented.

Which of the following is an example of irrelevant costs?

• Sunk costs.

• Variable costs.

• Opportunity costs.

• Incremental costs.

Irrelevant costs include costs that are:

• The same, regardless of the alternative chosen.

• Different for each decision.

• Dependent on future events.

• Variable with production levels.

What is an opportunity cost?

• The benefit gained from choosing an alternative

• The foregone benefit when one alternative is selected over another

• The cost of producing a new product

• The expense of maintaining current operations