If Managers Make Processing or Selling Decisions Using Incremental Revenue

question 40

Multiple Choice

If managers make processing or selling decisions using incremental revenue / incremental cost approach, which of the following statements is true?

• A) The resulting budgeted product-line income statement under the sales value at split off method, will show each product to have a positive operating income.
• B) The resulting budgeted product-line income statement under the physical measure method, will show each product to have a positive operating income.
• C) The resulting budgeted product-line income statement under the constant gross margin NRV method, will show each product to have a positive (or zero) operating income.
• D) Estimated net-realizable method the resulting budgeted product-line income statement under the estimated NRV method, will show each product to have a zero operating income.
• E) The resulting budgeted product-line income statement under the sales value at split off method, will show each product to have a negative operating income.

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Definitions:

Priority Claims

In bankruptcy proceedings, debts that are entitled to be paid before other debts due to their importance as defined by law, such as taxes and employee wages.

Bankruptcy Estate

The collective pool of assets and liabilities that are considered part of a debtor's estate under the bankruptcy code, subject to legal proceedings and distribution.

Secured Claims

are creditor's claims that are protected by a security interest in the assets of the debtor, giving the creditor a right to repossess the collateral if the debtor fails to fulfill the obligations.

Unsecured Claims

Debts or claims for which the creditor does not have any collateral security.