Chapter 8

Question 1

Relevant cost are

Answer 1

Incremental, differential, and marginal

Question 2

Differential approach

Answer 2

Only the relevant costs are considered

Question 3

Total approach

Answer 3

All the revenue and costs are displayed in the income statement the. The different NOI are compared

Question 4

Accept a special order?

Answer 4

If incremental revenue exceeds the incremental expense

Question 5

Target costing with price taker

Answer 5

Revenue-desired profit=total cost

Question 6

Cost plus pricing for price setter

Answer 6

Total cost+ desired profit=costplus price

Question 7

Discontinue?

Answer 7

Drop segment if avoidable fixed costs exceed contibution margin

Question 8

Resource constrants

Answer 8

Given a bottleneck, emphasize the products with the greatest contribution margin per unit of constrianted resources

Question 9

Make or buy?

Answer 9

Choose alternative that has the greatest net incremental revenues over incremental costs

Question 10

Joint products

Answer 10

Continue to process after split off if the incremental revenue after further processing exceeds the incremental cost of more processing