Lecture 12

Question 1

Relevant costs are:

Answer 1

future drivers

Question 2

Sunk costs are

Answer 2

is a past cost that cannot be avoided

Question 3

A decision to make a component internally versus a supplier is a

Answer 3

make-or-buy decision

Question 4

The Titanic hit an iceberg & sank; in deciding whether or not to salvage the ship, its book value is a(n):

Answer 4

Sunk cost

Question 5

If a cost is identical under each alternative under consideration within a given decision context, the cost is considered:

Answer 5

a irrelevant cost.

Question 6

Which of the following is NOT relevant to a make v buy decision

Answer 6

£30,000 of depreciation on plant used to manufacture the parts.

Question 7

Qualitative factors that should be considered when evaluating a make v buy decision are:

Answer 7

the quality of the outside supplier’s product.
whether the outside supplier can provide the needed quantities.
whether the outside supplier can provide the product when it is needed.