Management Accountants Are Frequently Asked to Analyze Various Decision Situations

question 92

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 III and V above are examples of:

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

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Definitions:

Tata Motors

An Indian multinational automotive manufacturing company, part of the Tata Group, known for producing cars, trucks, vans, coaches, buses, sports cars, and construction equipment.

Low-Cost Cars

Vehicles designed and marketed to be affordable for consumers, typically featuring lower price points and basic features.

Attractively Designed

Describes something created with aesthetics in mind, ensuring it is visually appealing or pleasing.

CVP Approach

Stands for Cost-Volume-Profit analysis, a financial modeling tool that helps companies understand the relationship between costs, sales volume, and profit.