Management Accountants Are Frequently Asked to Analyze Various Decision Situations

question 22

Multiple Choice

Management accountants are frequently asked to analyze various decision situations including the following:
(1) Alternative uses of plant space,to be considered in a make/buy decision.
(2) Joint production costs incurred,to be considered in a sell-at-split-off versus a process-further decision.
(3) Research and development costs incurred in prior months,to be considered in a product-introduction decision.
(4) The cost of a special device that is necessary if a special order is accepted.
(5) The cost of obsolete inventory to be considered in a keep-versus-disposal decision.
The costs described in situations 1 and 4 above are:

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

---

Definitions:

Ethical Standards

Principles that guide behavior and practices in both personal and professional contexts, based on notions of right and wrong.

Global Community

A term referring to the international network of individuals, societies, and nations interacting and interdependent upon one another.

Individual Level

Refers to psychological or behavioral processes occurring within a single person.

Extra Privileges

Special rights, advantages, or immunities granted to an individual or a group beyond the usual.