1. Qualitative factors in incremental analysis

Select one:

a. Sunk costs and opportunity costs are quantified to aid in improving the decision.

b. Contribution margin, degree of operating leverage and safety margin.

c. Advanced quantitative analytics are used to strengthen the analysis for decision makers.

d. Sometimes we need to look beyond the numbers - does the decision make sense for a business like this?

2. Opportunity Cost

Select one:

a. Instead of spending your summer in classes, you could have been out working (making money) or having fun at the beach.

b. We analyze the cost of new opportunities for business ventures.

c. None of these.

d. It is analysis we do for government contracts - as per federal business administration requirements.

3. Degree of operating leverage.

Select one:

a. None of these

b. The degree to which system operators are able to function within normal business operations.

c. Leveraging our key strengths in the company to improve costing, efficiency and quality in our manufacturing operations.

d. It is based in the concepts of continuous improvement. We seek to make our product higher quality with lower costs.

4. In a year in which total finished goods inventory balance grows from the beginning to the end of the year:

Select one:

a. Net income reported using absorption costing is higher than variable costing because more of the fixed production costs are held on the balance sheet - hence lower cost of goods sold.

b. Net income reported using absorption costing is lower than variable costing because more of the fixed production costs are held on the balance sheet - hence lower cost of goods sold.

c. Variable costing should be used for external financial reporting because the absorption costing method shows a distortion in operating income.

d. Inventory balance has no impact on reported income - it is a balance sheet item not an income statement item.