true or false

6. True False 7. True False 8. True False 9. True False 10. True False 11. True False Variable costs may not change under alternative courses of action, while fixed costs may change. When deciding whether to accept an order at a special price, management should make its decision on the basis of the total cost per unit and the expected revenue. If a company is operating at full capacity, the incremental costs of a special order will likely include fixed manufacturing costs. An example of an incremental analysis decision is make or buy. Opportunity cost is the potential benefit that may be obtained by following an alternative course of action The basic decision rule in a sell or process further decision is: sell without further processing as long as the incremental revenue from processing exceeds the incremental processing costs. Sell or process further decisions are particularly applicable to production processes that produce multiple products simultaneously. An important factor to be considered in a retain or replace equipment decision is the book value of the old equipment. A trade-in allowance or cash disposal value of an existing asset in a retain or replace equipment decision is irrelevant. During incremental analysis, qualitative features that are not easily measured should be ignored. An example of a qualitative factor is the effect on employees and the community when deciding whether to use outsourcing. 12 True False 13 True False 14. True False 15. True False 16. True False