1. Relevant costs in a sell-or-process-further decision include

a. joint product costs.

b. both additional revenues and additional costs.

c. only costs of additional processing.

d. total revenues after additional processing.

2. Candidates for outsourcing would include

a. custodial services.

b. payroll processing.

c. information management.

d. all of these choices.

3. Make-or-buy decisions may lead to

a. outsourcing.

b. joint products.

c. a more diversified sales mix.

d. none of these choices.

4. In a proposal to increase the production of clock radios, the sales manager of Rinaldo Electronics reported the total additional cost required to meet the increased production level. The increase in total cost is known as the

a. opportunity cost.

b. sunk cost.

c. uncontrollable cost.

d. differential cost.

5. Which of the following costs are the benefits that are forfeited or lost when one alternative is chosen over another?

a. Opportunity cost

b. Incremental cost

c. Direct cost

d. Sunk cost

6. Estimated future costs that differ between alternative courses of action are termed as ____________ costs in management decision analysis.

a. sunk

b. absorption

c. relevant

d. replacement

7. The point at which products are separated in a joint production process is the

a. split-off point.

b. joint product point.

c. separation point.

d. breakeven point.

8. With a special order decision, the fixed costs of existing facilities

a. change in proportion of the order to net sales.

b. change drastically.

c. do not change and are therefore irrelevant.

d. do not change and are relevant.

9. When are sunk costs omitted from decision analysis?

a. Never.

b. Only if necessary.

c. Only if they are immaterial.

d. Always.

10. Avoidable costs are important for

a. sales mix decisions.

b. sell-or-process-further decisions.

c. decisions to eliminate unprofitable segments.

d. pricing decisions for special orders.