Question

QUESTION 1

1. Which of the sources listed below would a manager be least likely to consider in deciding whether or not to discontinue a given segment?

   		Direct segment costs
   		An evaluation of the importance of the segment to overall operations
   		The corporate fixed costs allocated to the segment
   		Segment reports

2 points   

QUESTION 2

1. Which of the following revenues or costs should be excluded from the financial analysis of whether to outsource?

   		The two million dollar investment last year in equipment to make the parts internally.
   		The per-part cost to be paid to the supplier
   		The fixed costs that could be eliminated if production was outsourced.
   		The $780 monthly revenue that could be earned by leasing the production space currently used to make the part internally

2 points   

QUESTION 3

1. A(n) ____________ cost is the net benefit that could be obtained by following the next best alternative course of action.

   		Avoidable
   		Contribution margin
   		Outlay
   		Opportunity

2 points   

QUESTION 4

1. A cost incurred several years ago that can not be changed and should not influence current business decisions is called __________.

   		A differential cost
   		An opportunity cost
   		A relevant cost
   		A sunk cost

2 points   

QUESTION 5

1. When evaluating a capital budgeting decision, which of the following evaluation tools would incorporate the time value of money?

   		Payback method
   		ROI
   		NPV
   		EVA

Answer 1

1.The corporate fixed costs allocated to the segment

These fixed cost will be incurred irrespective of any decision so it will be considered Irrelevant cost.

2. The two million dollar investment last year in equipment to make the parts internally.

This cost is already incurred , so its historical cost/Sunk cost so it will not be considered.

3.Opportunity cost.

4.A sunk cost

5..NPV- Net Present Value