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Accounting 303-Final Questions with
Detailed Verified Answers
Question: Variable costs will generally be relevant for decision making
because they:
Answer: Have not been committed and are likely to differ between decision
options.
Question:Fixed costs will often be irrelevant for short-term decision making
because they:
Answer: Typically do not differ between decision alternatives being
considered.
Question:All of the following are characteristic of relevant costs except:
Answer: They are inventory-related costs.
Question:Operating at or near full capacity will require a firm considering a
“special sales order” to potentially recognize the
Answer: Opportunity cost from lost sales.
Question:Done on a regular basis, relevant cost pricing in “special-order
decisions” can erode normal pricing policies and lead to:
Answer: decrease in the firm’s long-term profitability.
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Question:The decision to keep or drop products or services involves strategic
consideration all of the following except:
Answer: The desired inventory levels of the product
Question:A useful device or concept for solving production problems
involving multiple products and limited resources is:
Answer: Contribution per unit of scarce resource
Question:A cost is not relevant for decision making if it:
Answer: Does not differ for each option available to the decision maker.
Question:Which one of the following concepts is correct for determining
relevant costs for decision-making?
Answer: Differential
Question:In making a decision whether to accept or reject a “special sales
order,” managers need critical information about all of the following except:
Answer: Prior period operating costs.
Question:Which of the following statements regarding “opportunity costs” is
true?
Answer: These costs relate to the benefit lost or foregone when a chosen
option (course of action) precludes the benefits of an alternative option from
being realized.
Question:The opportunity cost of making a component part in a factory with
no excess capacity is the:
