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Leders 11-24 21: Relevant Costing for Managerial Decisions Formy 68. Asunk cost A requires a future outlay of cash B. is the potential benefit lost by choosing one alternative over another c. is also called an avoidable cost D. arises from a past decision and cannot be avoided or changed 69. Sales in units are 20.000, sales prise e n is $12. Ne got it is and fixed cost total If sales price per unit is reduced to Siland fixed costs increase by $2.000, it is predicted that sales will increase to 30.000 units. Proposed net income if changes occur is A $40,000 B $12.000 C. $8.000 D SO A product normally sells for $200 per unit. A special price of S180 is offered for the export market. The vanable production cost is $10 per unit An tional por tariff of 10% of revenue must be paid for all export products. The incremental net income from accepting the special order is A S20 per unit B SIS per unit C. $2 per unit D. SO per unit 71. A company manufactures a part for $150 unit, including fixed costs of $50 per mi. The company can purchase the part from an outside source for ST10 per unit, plus $10 per unit freight. The company's cos savings will be (Hint: Compute incremental income from each option and determine the difference. A $40 per unit if the company purchases the part B SM per unit if the company purchases the part C S20 per unit if the company manufactures the part D. SIO per unit is the company manufactures the part 72. A company inadvertently produced 10.000 defective units. The units cost $10 cach to produce. A salvage company will purchase the defective units as they are for S3 cach. The company's production manager reports that the defects can be corrected for S6 per unit, enabling them to be sold at their regular market price of SIO. Incremental net income from reworking the units (over being sold as they are) is Hint: Compute incremental income from each option and determine the difference.) A $40,000 B $30,000 C $20,000 D. $10,000 73. The decision rule is that a segment is a candidate for elimination if A its unavoidable expenses are higher than its revenue B. its revenues are less than its avoidable expenses C. its avoidable expenses are higher than its unavoidable expenses D it has a net loss Chapter 24: Capital Budgeting and Investment Analysis 74. The process managers use in analyzing long-term investments to decide what assets to acquire or sell is called A variance analysis B. financial statement analysis C. capital budgeting D. cost-volume-profit analysis 75. A company is considering the purchase of a machine costing $32,000 with no salvage value and an eight life. Annual depreciation is $4,000 using the straight-line method. Expected accrual income is $4,200 from this project. Expected annual net cash flow is A. $8,200 B. $4,200 C. $4,000 D. $200

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