MULTIPLE ANSWER QUESTIONS - If you're not able to answer them all, please skip entirely. Thank you.

1) Alvarez Company is considering the following alternatives:

What is the incremental profit?

1. $10,000
2. $0
3. $6,000
4. $4,000

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2) Which of the following is an irrelevant cost?

1. An avoidable cost
2. An incremental cost
3. A sunk cost
4. An opportunity cost

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3) Relevant costs are always

1. fixed costs.
2. variable costs.
3. avoidable costs.
4. sunk costs.

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4) What of the following would not be relevant in a make-or-buy decision?

1. Unavoidable variable costs
2. Incremental fixed costs
3. Opportunity costs
4. Avoidable fixed cost

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5) Max Company uses 20,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is

1. $0.
2. $20,000.
3. $140,000.
4. $160,000.

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6) Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected:

Which of the following amounts is irrelevant to the replacement decision?

1. $375,000
2. $135,000
3. $315,000
4. $60,000

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Revenues Variable costs Fixed costs Alternative A_Alternative B $50,000 $ 60,000 30,000 30,000 10,000 16,000 Old Equipment New Equipment Purchase price $225,000 $375,000 Accumulated depreciation 90,000 -O- Annual operating costs 300,000 240,000 If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years