#1
Which of the following costs are relevant in decision making?
Opportunity costs
ExplanationCosts representing the benefit of choosing one alternative over another.
#2
What is a sunk cost?
A cost that has been incurred and cannot be recovered
ExplanationExpenses already spent that cannot be recuperated.
#3
Which of the following costs is not relevant in decision making?
Sunk costs
ExplanationPast expenses that are irrelevant to future decisions.
#4
What is the formula to calculate incremental revenue?
Final revenue - Initial revenue
ExplanationThe difference between revenues before and after a decision.
#5
What is the primary focus of relevant costing?
Considering only costs that differ among alternatives
ExplanationConcentrating on expenses that change with different choices.
#6
Which of the following is an example of an avoidable cost?
Direct materials
ExplanationExpenses that can be eliminated by choosing an alternative.
#7
When making a decision, which costs should be compared?
Relevant costs of each alternative
ExplanationComparing only expenses that vary between options.
#8
What is the key difference between relevant costs and irrelevant costs?
Relevant costs are future-oriented, while irrelevant costs are past-oriented
ExplanationFocus on prospective expenses versus historical expenditures.
#9
Which of the following is an example of an opportunity cost?
Rental income from leasing out a building you own
ExplanationThe potential revenue forfeited by choosing one option over another.
#10
What is the opportunity cost of choosing one alternative over another?
The benefit foregone from not choosing the next best alternative
ExplanationThe value of the best alternative forgone by selecting a particular option.
#11
Which of the following is a characteristic of a relevant cost?
It varies between alternatives
ExplanationExpenses that change depending on the chosen option.
#12
What is the term used to describe the difference in costs between two alternatives?
Incremental cost
ExplanationThe additional expense incurred by choosing one option over another.
#13
Which of the following costs would typically be considered an irrelevant cost?
Sunk costs
ExplanationExpenses already paid and unrelated to future decisions.
#14
Which of the following best describes an incremental cost?
The difference in total costs between two alternatives
ExplanationThe additional expense associated with choosing one option over another.