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Ac330 Unit 5

In: Business and Management

Submitted By kfulrath
Words 496
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A previously incurred cost which will not change in the future is a(n) opportunity cost. historical cost. fixed cost. sunk cost. 2. Specik, Inc. is considering the following alternatives: Alternative 1 Alternative 2 Revenues $120,000 $120,000 Variable costs 60,000 70,000 Fixed costs 35,000 39,000 Which of the following are relevant in choosing between the alternatives? Variable costs Revenues Fixed costs Variable costs and fixed costs 3. Sorrento Company's plant is operating at less than full capacity. The company just received a one-time opportunity to accept an order at a special price below its usual price. The special price exceeds its variable costs. Therefore, which statement is true? Fixed costs are relevant. The order will likely be accepted. The order will likely be rejected. Sorrento should expand its plant capacity before accepting the order. 4. Wishnell Toys can make 1,000 toy robots with the following costs: Direct Materials $70,000 Direct Labor 26,000 Variable Overhead 15,000 Fixed Overhead 15,000 The company can purchase the 1,000 robots externally for $120,000. The avoidable fixed costs are $5,000 if the units are purchased externally. What is the cost savings if the company makes the robots? $1,000 $5,000 $10,000 $4,000 5. Which one of the following is not a disadvantage of buying rather than making a component of a company's product? Quality control specifications may not be met. The outside supplier could increase prices significantly in the future. Profitable product lines may be dropped. The supplier may not deliver on time. 6. Truckel, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $22 Variable overhead 10 Fixed overhead 16 Total $48 Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $36 each. If Truckel makes the wickets, variable

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