Contribution Margin; Sunk, Average, Incremental and Fixed Costs; Joint Products 36 A decision to dis


Contribution Margin; Sunk, Average, Incremental and Fixed
Costs; Joint Products

36 A decision to discontinue a given product on the basis
of contribution margin data should include consideration of the probable impact
of the discontinuance on the sales of other products

a True

b False

37 Which of the following types of cost is always relevant
to a decision?

a Sunk costs

b Average costs

c Incremental costs

d Fixed costs

38 Which is an example of joint products?

a Sugar and beef

b Pens and erasers

c Granulated coal and methyl alcohol

d Iron and plastic

39 Accepting a special order is profitable whenever the
revenue from the special order exceeds:

a The average unit cost of production multiplied by the
number of

units in the order

b The incremental cost of producing the order

c The materials and direct labor costs of producing the
order

d The fixed manufacturing costs for the period

40 Computer City manufactured 100 personal computers at a
cost of $65,000 It can sell them as is for $100,000 or install hard disks in
them and sell them for $140,000 The $65,000 original manufacturing cost is:

a An out-of-pocket cost because it has already been paid

b A sunk cost because it is not relevant to the decision

c An incremental cost because it is relevant to the
decision

d A fixed cost because it will remain the same no matter
which

action is taken

41 Products for which sales of one contribute to the sales
of another are called:

a Complementary products

b Competing products

c Contributory products

d Codependent products

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