The Following Are Silver Corporation's Unit Costs of Making and Selling

question 181

Multiple Choice

The following are Silver Corporation's unit costs of making and selling an item at a volume of 8,000 units per month (which represents the company's capacity) :
Present sales amount to 7,000 units per month. An order has been received from a customer in a foreign market for 1,000 units. The order would not affect regular sales. Total fixed costs, both manufacturing and selling and administrative, would not be affected by this order. The variable selling and administrative costs would have to be incurred for this special order as well as all other sales. Assume that direct labor is a variable cost.
-Assume the company has 50 units left over from last year which have small defects and which will have to be sold at a reduced price for scrap.The sale of these defective units will have no effect on the company's other sales.Which of the following costs is relevant in this decision?

• A) $11 variable manufacturing cost
• B) $19 unit product cost
• C) $1 variable selling and administrative cost
• D) $26 full cost

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Definitions:

Type II Error

The error that occurs when the null hypothesis is falsely accepted, failing to detect an effect or difference when one actually exists.

Null Hypothesis

The hypothesis in statistical analysis that posits no significant difference or relationship exists among groups or variables being studied.

P-Value

The chance of receiving test results that are as extreme or exceed the extremity of those actually observed, with the null hypothesis assumed to be true.

Significance Level

The likelihood of mistakenly dismissing the null hypothesis, typically represented by alpha, when in truth it holds.