Unit 7 Chapter 11 Interactive Presentation (ACCT211H)

Unit 7 Chapter 11 Interactive Presentation(ACCT211H) 1.What of the following forms the basis for a financial advantage when making a business decision? Whether the differential benefits exceed the differential costs 2.Costs that have been incurred and cannot be eliminated regardless of the alternative chosen are sunk costs 3.High Roller Incorporated is trying to decide whether to buy a private jet or to lease one. The finder's fee is incurred only if the private jet is bought. The finder's fee is what type of cost for this decision? Relevant cost 4.Which of the following statements about using different approaches to analyze alternatives is NOT true? Considering only the relevant costs gives results a different answer than that obtained when all costs are considered. 5.A company with various segments (referred to as "divisions") is considering whether to drop its Orange County division. For each of the costs described below, indicate whether the cost is avoidable or unavoidable by choosing the related drop-down menu item. 1. Wages paid to the Orange County division employees who work directly for this division and will be discharged if the division is dropped.Avoidable 2. General administrative expenses allocated to the Orange County division on the basis of sales dollars.Unavoidables 3. Depreciation expense on previously purchased machinery that is used in the Orange County division; the machinery will have no other use or resale value if the division is dropped. Unavoidables 4. Rent paid for the building that houses only the Orange County division.Avoidables 5. The amount of rent paid to lease a private jet for use by the company's management that is allocated to the Orange County division. Unavoidable 6.A company has three product lines, one of which reflects the following results: Sales$ 215,000 Variable expenses125,000 Contribution margin90,000 Fixed expenses140,000 Net loss$ (50,000) If this product line is eliminated, 60% of the fixed expenses are traceable fixed expenses, which can be eliminated, and the other 40% are common fixed expenses that cannot be avoided.If management decides to eliminate this product line, the company's net income willDecrease $6000. 7.The involvement by a company in more than one of the activities in the entire value chain from development through production, distribution, sales, and after-sales service is calledvertical integration. 8.Nakatomi Corporation produces 10,000 units of Product A at a cost of $20 per unit. A detailed breakdown of the cost is below. Per Unit Variable costs$ 12 Allocated manufacturing overhead costs3 Allocated general administrative costs5 $ 20 Outside supplier's offer$ 17 What are the total relevant cost of producing the units internally?$120,000 Total Relevant Cost = 10000*12 = 120,000 9.The potential benefit that is given up when one alternative is selected over another is called opportunity cost. 10.Which of the following types of decisions involves deciding whether to accept or reject an order that is outside the scope of normal sales? Special order