Allocated fixed costs are never relevant to an outsourcing decision, but companies still must allocate fixed costs for pricing and financial statement purposes.

A. True

B. False

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Question 35 of 471 Points

An example of a relevant fixed cost in an outsourcing decision would be the salary of a production manager of the potentially outsourced part where the manager will be reassigned to the production of another part.

A. True

B. False

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Question 36 of 471 Points

An advantage to using Residual Income to evaluate investment center managers is that it can be used to compare and evaluate managers of different size organizations.

A. True

B. False

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Question 37 of 471 Points

Reducing operating assets will improve a company's ROI but will have no impact on the company's Residual Income.

A. True

B. False