Management Accountants Can Help Support the Quality Initiatives of Management

question 96

Multiple Choice

Management accountants can help support the quality initiatives of management by supplying decision makers with relevant financial information regarding these initiatives. Which of the following statements is true regarding costs that are relevant for decision making within this context?

• A) Relevant costs are variable costs.
• B) Relevant costs are fixed costs.
• C) Relevant costs include out-of-pocket but not opportunity costs because the latter are not recorded by accounting systems.
• D) Relevant costs are future costs that differ between (or across) decision alternatives.
• E) Relevant costs would not include estimated losses due to reduced market share.

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Definitions:

Parity Ratio

A ratio that compares the value of one set of goods or services to another, often used in agricultural economics to compare farm prices to other prices in the economy.

Clayton Act

The federal antitrust law of 1914 that strengthened the Sherman Act by making it illegal for firms to engage in certain specified practices including tying contracts, interlocking directorates, and certain forms of price discrimination.

Wagner Act

Officially known as the National Labor Relations Act of 1935, it is a foundational statute of United States labor law which guarantees basic rights of private sector employees to organize into trade unions, engage in collective bargaining, and take collective action including strikes.

FTC Act

A federal law established to prevent unfair methods of competition, and unfair or deceptive acts affecting commerce.