MC7–1
Chapter 7
Relevant Costs and Product Planning Decisions
Multiple Choice
1. (LO 1—Special order)
Answer: B
The relevant costs of selling hotdogs include only $1.00 of variable costs.
2. (LO 1—Special order: Quantitative and qualitative factors)
3. (LO 1—Special order)
4. (LO 2—Outsourcing)
5. (LO 2—Outsourcing: Vertical integration)
Answer: C
6. (LO 2—Outsourcing: Disadvantages)
Solutions to Multiple Choice
7. (LO 3—Dropping a product line)
Answer: D
8. (LO 3—Dropping a product line)
9. (LO 4—Limited resources)
10. (LO 4—Limited resources)
11. (LO 4—Limited resources)
12. (LO 4—Limited resources)
Answer: C
Chapter 7: Relevant Costs and Product Planning Decisions
13. (LO 5—Theory of constraints)
14. (LO 6—Sell or process further)
The $0.20 joint production cost is a sunk cost and is not relevant. The
additional processing costs of $0.06 are relevant.
15. (LO 6—Sell or process further)