Management Accountants Are Frequently Asked to Analyze Various Decision Situations

question 78

Multiple Choice

Management accountants are frequently asked to analyze various decision situations including the following:

● The cost of a special device that is necessary if a special order is accepted.
● The cost proposed annually for the plant service for the grounds at corporate headquarters.
● Joint production costs incurred, to be considered in a sell-or-process-further decision.
● The costs associated with alternative uses of plant space, to be considered in a make/buy decision.
● The cost of obsolete inventory acquired several years ago, to be considered in a keep-versus-disposal decision.

The costs described in situations I and IV above are examples of:

• A) Prime costs.
• B) Sunk costs.
• C) Discretionary costs.
• D) Relevant costs.
• E) Opportunity costs.

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Definitions:

Alcohol

Organic compounds characterized by the presence of one or more hydroxyl (-OH) groups attached to a carbon atom.

Alkyne

A hydrocarbon that contains at least one carbon-carbon triple bond, characterized by the formula CnH2n-2.

1H NMR

A type of nuclear magnetic resonance spectroscopy focusing on the detection of hydrogen-1 isotopes, used to determine the structure of organic compounds.

KMnO4

Potassium permanganate is a chemical substance utilized as an oxidizing agent in a variety of chemical processes.