Which of the Following Is Irrelevant When Making a Decision

question 16

Multiple Choice

Which of the following is irrelevant when making a decision?

• A) The original cost of an asset that the company is considering replacing
• B) The fixed overhead costs that differ among decision alternatives
• C) The cost of further processing a product that could be sold as is
• D) The expected increase in contribution margin of one product line as a result of a decision to drop a separate unprofitable product line

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, recognizing income and losses proportional to the level of ownership.

Outstanding Common Stock

Outstanding common stock refers to the total number of shares of a corporation's stock that are currently owned by all its shareholders, including shares held by institutional investors and restricted shares.

Unrecorded Patents

Patents that an organization owns which have not been recorded in its financial statements.

Dividends

Payments made by a corporation to its shareholder members, usually derived from profits.