Incremental Analysis Qiuzzer Part 2 (16-31)
Incremental Analysis Qiuzzer Part 2 (16-31)
Incremental Analysis Qiuzzer Part 2 (16-31)
INCREMENTAL ANALYSIS
THEORIES: 16-31
16. Relevant costs are
A. all fixed and variable costs
B. all costs that would be incurred within the relevant range of production
C. past costs that are expected to be different in the future
D. anticipated future costs that will differ among various alternatives
17. Which of the following is (are) a true statement(s) about cost behaviors in
incremental analysis?
I. Fixed costs will not change between alternatives.
II. Fixed costs may change between alternatives.
III. Variable costs will always change between alternatives.
A. I
B. II
C. Ill
D. II and III
18. The potential benefit that may be obtained from following an alternative course
of action is called
A. Opportunity benefit
B. Opportunity cost
C. Relevant cost
D. sunk cost
19. Which one of the following is not a common mistake in a decision-making
process?
A. Considering sunk costs as relevant.
B. Considering opportunity cost, an imputed cost, being relevant.
C. Considering fixed costs as avoidable fixed costs.
D. Unitizing fixed costs.
20. Sensitivity analysis is useful in decision making when:
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INCREMENTAL ANALYSIS
B. expense control
C. quarterly net income results
D. long-term strategic goals
25. Incremental analysis is the process of identifying the financial data that:
A. do not change under alternative courses of action
B. are mixed under alternative courses of action
C. change under alternative courses of action
D. no correct answer is given
26. Opportunity cost is the
A. cash outlay required to implement an alternative.
B. difference in total costs between the alternatives.
C. maximum available contribution to profit that is given up when using
limited resources for another purpose.
D. fixed cost avoided when a product, department, or business unit is
abandoned.
27. Using opportunity cost to analyze the income effects of a given alternative is
referred to as
A. engineering analysis
B. mixed-cost analysis
C. account analysis
D. differential analysis
28. Opportunity costs are
A. Costs that increase due to a higher volume of activity or the performance of
an additional activity
B. Costs that a company must incur to perform an activity at a given level,
but will not be incurred if a company reduces or discontinues the activity
C. The profits that a company forgoes by following a particular course of
action
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INCREMENTAL ANALYSIS