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Business > QUESTIONS & ANSWERS > [Solved] [Solution] Acct 505 Discussion (All)

[Solved] [Solution] Acct 505 Discussion

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12-1 What is a relevant cost? 12-2 Define the following terms: incremental cost, opportunity cost, and sunk cost. 12-3 Are varia ... ble costs always relevant costs? Explain. 12-4 “Sunk costs are easy to spot—they're the fixed costs associated with a decision.” Do you agree? Explain. 12-5 “Variable costs and differential costs mean the same thing.” Do you agree? Explain. 12-6 “All future costs are relevant in decision making.” Do you agree? Why? 12-7 Prentice Company is considering dropping one of its product lines. What costs of the product line would be relevant to this decision? What costs would be irrelevant? 12-8 “If a product is generating a loss, then it should be discontinued.” Do you agree? Explain. 12-9 What is the danger in allocating common fixed costs among products or other segments of an organization? 12-10 How does opportunity cost enter into a make or buy decision? 12-11 Give at least four examples of possible constraints. 12-12 How will relating product contribution margins to the amount of the constrained resource they consume help a company maximize its profits? 12-13 Define the following terms: joint products, joint costs, and split-off point. 12-14 From a decision-making point of view, should joint costs be allocated among joint products? 12-15 What guideline should be used in determining whether a joint product should be sold at the split-off point or processed further? 12-16 Airlines sometimes offer reduced rates during certain times of the week to members of a businessperson's family if they accompany him or her on trips. How does the concept of relevant costs enter into the decision by the airline to offer reduced rates of this type? [Show More]

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