Accounting Information For Business Decisions 2nd Edition By Billie Cunningham – Test Bank
Chapter 11 – Short-Term Planning Decisions
COMPLETION
1. Decision making involves recognising the need for a decision, identifying alternative solutions, evaluating the solution and _________________________.
ANS: making the decision
PTS: 1 DIF: Easy TOP: Decision making
2. When a business evaluates each decision alternative the key question is ____________________?
ANS: what difference does it make
PTS: 1 DIF: Easy TOP: Decision making
3. One important area where decision alternatives make a difference is in a business’ ____________________.
ANS: profit
PTS: 1 DIF: Easy TOP: Relevant costs and revenues
4. ______________________________ are future costs and revenues that will change as a result of a decision.
ANS: Relevant costs and relevant revenues
PTS: 1 DIF: Easy TOP: Relevant costs and revenues
5. Future revenues are ____________________ revenues.
ANS: relevant
PTS: 1 DIF: Easy TOP: Relevant costs and revenues
6. Costs or revenues that do not differ between alternatives can be ____________________ because they will not help in choosing between alternatives.
ANS: ignored
PTS: 1 DIF: Moderate TOP: Relevant costs and revenues
7. No cost incurred ____________________ to the decision is relevant.
ANS: prior
PTS: 1 DIF: Easy TOP: What activities are necessary for the business to carry out the decision?
8. Relevant costs are ____________________ costs.
ANS: future
PTS: 1 DIF: Easy TOP: What activities are necessary for the business to carry out the decision?
9. ____________________ are cost increases resulting from the performance of an additional activity.
ANS: Incremental costs
PTS: 1 DIF: Easy TOP: Incremental costs
10. ____________________ are the costs that must be incurred to perform an activity, but that can be avoided if that activity is reduced or discontinued.
ANS: Avoidable costs
PTS: 1 DIF: Easy TOP: Avoidable costs
11. ____________________ are the profits forgone by following a particular course of action.
ANS: Opportunity costs
PTS: 1 DIF: Easy TOP: Opportunity costs
12. A ____________________ is a situation that is available when a customer offers to purchase a quantity of goods at less than the usual selling price.
ANS: special order
PTS: 1 DIF: Easy TOP: Illustration of determining relevant costs and revenues (special order)
13. A business should drop a product only if the total ____________________ costs are more than the revenue it would lose if it dropped the product.
ANS: avoidable
PTS: 1 DIF: Easy TOP: Deciding whether to drop a product
14. _________________________ is a decision that occurs if the profitability of a product declines.
ANS: Dropping a product
PTS: 1 DIF: Easy TOP: Deciding whether to drop a product
15. In the make versus buy decision, the business should ultimately choose the alternative with the lowest ____________________.
ANS: cost
PTS: 1 DIF: Easy TOP: Deciding whether to make or buy a part
