Which of the following statements regarding costs and decision making is correct?
A. Per-unit fixed costs can be misleading because such amounts appear to behave as variable costs when, in actuality, the amounts are related to fixed expenditures.
B. Per-unit fixed cost amounts are valid only for make-or-buy decisions.
C. Sunk costs can be misleading in make-or-buy decisions because these amounts appear to be relevant differential costs.
D. Fixed costs must be considered only on a per-unit basis.
E. Opportunity costs should be ignored when evaluating decision alternatives.
Answer: A
You might also like to view...
A non-business entity would be particularly concerned about its
a. earnings per share b. price/earnings ratio c. liquidity d. income tax rate
To record wages earned but not paid under the modified cash basis of accounting would require
a. debiting Wages Payable and crediting Wages Expense; b. debiting Cash and crediting Wages Expense; c. debiting Wages Expense and crediting Wages Payable; d. debiting Prepaid Wages and crediting Wages Payable; e. none of these
Using the just-in-time model, a manufacturer doesn't produce a product until a customer orders it
Indicate whether the statement is true or false
Which of the following would be a supervening event from the standpoint of a car manufacturer
that has been sued in strict liability for an injury caused by one of its cars? A) An enactment, after the date of the injury, of a new safety regulation that would have prevented the injury B) A redesign of the particular model car such that the ones being currently manufactured do not have the defect, which led to the injury C) A recall notice sent to the car owner that was ignored D) The fact that the defect was caused by the car dealer when the car dealer was installing accessories for the purchaser