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Management accountants are frequently asked to analyze various decision situations including the following:
1.The cost of a special device that is necessary if a special order is accepted.
2.The cost proposed annually for the plant service for the grounds at corporate headquarters.
3.Joint production costs incurred, to be considered in a sell-or-process-further decision.
4.The costs associated with alternative uses of plant space, to be considered in a make/buy decision.
5.The cost of obsolete inventory acquired several years ago, to be considered in a keep-versus-disposal decision.
The costs described in situations I and IV above are examples of:
answers could be: Discretionary costs. Prime costs. Relevant costs. Opportunity costs. Sunk costs.
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