Chapter 13 From Review Questions

Question 1

Every Decision involves choosing between at least

Answer 1

two alternatives

Question 2

What should be ignored when making decisions?

Answer 2

sunk costs

Question 3

avoidable costs are always:

Answer 3

relevant costs

Question 4

differential costs are always:

Answer 4

relevant costs

Question 5

Keep or drop- what’s relevant? Merchandising company’s product line

Answer 5

the contribution margin earned by the product line

Question 6

Keep or drop- what’s irrelevant? Merchandising company’s product line

Answer 6

store managers salary

Question 7

When making a volume trade-off decision managers should never:

Answer 7

produce more of a product line than demanded by the customers

Question 8

Decide to go to a movie or rent a movie, order a pizza to the house is a

Answer 8

a future decision that does not differ between the alternatives

Question 9

What is not relevant when deciding whether to keep or replace a piece of equipment?

Answer 9

the original cost of the asset that would be replaced