TRUE OR FALSE

1. In incremental analysis, total variable costs will always change under alternative courses of action, and total fixed costs will always remain constant.
2. In incremental analysis, total fixed costs will always remain constant under alternative courses of action.
3. A special one-time order should not be accepted if the unit sales price is less than the unit variable cost.
4. A company should never accept an order for its product at less than its regular sales price.
5. An opportunity cost is the potential benefit obtained by using resources in an alternative course of action.
6. If an incremental make or buy analysis indicates that it is cheaper to buy rather than make an item, management should always make the decision to choose the lowest cost alternative.
7. It is always better to sell now rather than process further because of the time value of money.
8. The basic decision rule in a sell or process further decision is: process further if the incremental revenue from processing exceeds the incremental processing costs.
9. In a decision to retain or replace old equipment, the salvage value of the old equipment is relevant in incremental analysis.
10. From a quantitative standpoint, a segment should be eliminated if its contribution margin is less than the fixed costs that can be eliminated.
11. 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.
12. Elimination of an unprofitable product line may adversely affect the remaining product lines.
13. Accounting contributes to managements decision-making process through internal reports that review the actual impact of the decision.
14. If a company is operating at less than capacity, the incremental costs of a special order will likely include variable manufacturing costs, but not fixed costs.