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.

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Definitions:

Collect Like Terms

A mathematical process in algebra that involves combining terms that have the same variables raised to the same power.

Operation Indicated

The specific procedure or set of procedures designated by particular signs in an equation or formula.

Collect Like Terms

In algebra, the process of combining terms that have the same variables raised to the same power into a single term.

Operation Indicated

Definition: The specific arithmetic operation (such as addition, subtraction, multiplication, division) suggested or required by a problem or equation.