Managerial Accounting Exam #3 Verified Exam Questions and Answers
Latest update 2026/2027
Question:
you are trying to decide whether to trade in your laser printer for a more recent model. your usage
pattern will remain unchanged, but the old and new printers use different toner cartridges. are the
following items relevant or irrelevant to your decision?
Answer:
a) the trade-in value of the old printer is: RELEVANT
b) paper costs are: IRRELEVANT
c) the difference between the cost of toner cartridges is: RELEVANT
d) the price of the new printer is: RELEVANT
e) the price you paid for the old printer is: IRRELEVANT
Question:
jubilee frozen foods purchased new computer-controlled production machinery last year from
advanced design. the equipment was purchased for 4.1 million and was paid for with cash. a
representative from advanced design recently contacted jubilee management because advanced design
has an even more efficient piece of machinery available. the new design would double the production
output of the equipment purchased last year but would cost jubilee another 5.0 million. the old
machinery was installed by an engineering firm; the same firm would be required to install the new
machinery...... etc.......
Answer:
a) book value of old machine: NOT RELEVANT
b) maintenance cost of new machine: NOT RELEVANT
c) maintenance cost of old machine: NOT RELEVANT
d) installation cost of new machine: RELEVANT
e) accumulated depreciation on old machine: NOT RELEVANT
f) cost per pound of food to be processed by the machinery: NOT RELEVANT
g) installation cost of old machine: NOT RELEVANT
h) cost of the new machine: RELEVANT
i) cost of the old machine: NOT RELEVANT j) added profits from the increase in production
resulting from the new machine:
RELEVANT k) fixed selling costs: NOT RELEVANT
, Question:
E8-20A fill in the table
Answer:
l) variable selling costs: RELEVANT m) trade-in value of old machine: RELEVANT n) interest
expense on new machine: RELEVANT o) sales tax paid on old machine: NOT RELEVANT
requirement 2) revenue at market price LESS: desired profit == target cost per home LESS: actual
current variable cost == Expected excess profit (profit shortfall) requirement 3) Current variable costs
PLUS: variable cost of kitchen and bath upgrade
Question:
which of the following best describes a "sunk cost" a "relevant cost" is best described by which of the
following fixed costs that do not differ between two alternatives are which of the following is not a
sunk cost purchase price of vehicle to be traded in fixed costs that may be avoided in the future are
referred to as
Answer:
== total variable costs PLUS: desired profit == cost-plus price costs that were incurred in the past and
cannot be changed expected future costs that differ among alternatives irrelevant to the decision
relevant costs
Question:
the format of the income statement most useful in decision-making is which of the following in a
special sales order decision, the special price must exceed the variable cost of filling the order. in other
words, the special order must have in a special sales order decision, incremental fixed costs that will
be incurred if the special order is accepted are considered to be managers should consider all of the
following when deciding whether to accept a special order, except a manager should always reject a
special order if which would be a consideration for making special orders the cost-plus price is
described by which of the following target total cost is described by which of the following managers
must consider which of the following when pricing a product or service which of the following pairs
are characteristics of price-takers which of the following pairs are characteristics of price-setters
stockholders' expectations of company profits are affected by which of the following which of the
following describes the products and services of companies that are price-setters big-box retailers such
as Lowe's are considered price-takers because methods for a company to meet target cost and the
profit goals if the current cost of the product is higher than the target cost include which of the
following
Answer:
contribution margin format a positive contribution margin relevant to the decision fixed costs that will
not be affected by the order the special order price is less than the variable costs of the order all of the
above total cost plus desired profit revenue at market price minus desired profit
Latest update 2026/2027
Question:
you are trying to decide whether to trade in your laser printer for a more recent model. your usage
pattern will remain unchanged, but the old and new printers use different toner cartridges. are the
following items relevant or irrelevant to your decision?
Answer:
a) the trade-in value of the old printer is: RELEVANT
b) paper costs are: IRRELEVANT
c) the difference between the cost of toner cartridges is: RELEVANT
d) the price of the new printer is: RELEVANT
e) the price you paid for the old printer is: IRRELEVANT
Question:
jubilee frozen foods purchased new computer-controlled production machinery last year from
advanced design. the equipment was purchased for 4.1 million and was paid for with cash. a
representative from advanced design recently contacted jubilee management because advanced design
has an even more efficient piece of machinery available. the new design would double the production
output of the equipment purchased last year but would cost jubilee another 5.0 million. the old
machinery was installed by an engineering firm; the same firm would be required to install the new
machinery...... etc.......
Answer:
a) book value of old machine: NOT RELEVANT
b) maintenance cost of new machine: NOT RELEVANT
c) maintenance cost of old machine: NOT RELEVANT
d) installation cost of new machine: RELEVANT
e) accumulated depreciation on old machine: NOT RELEVANT
f) cost per pound of food to be processed by the machinery: NOT RELEVANT
g) installation cost of old machine: NOT RELEVANT
h) cost of the new machine: RELEVANT
i) cost of the old machine: NOT RELEVANT j) added profits from the increase in production
resulting from the new machine:
RELEVANT k) fixed selling costs: NOT RELEVANT
, Question:
E8-20A fill in the table
Answer:
l) variable selling costs: RELEVANT m) trade-in value of old machine: RELEVANT n) interest
expense on new machine: RELEVANT o) sales tax paid on old machine: NOT RELEVANT
requirement 2) revenue at market price LESS: desired profit == target cost per home LESS: actual
current variable cost == Expected excess profit (profit shortfall) requirement 3) Current variable costs
PLUS: variable cost of kitchen and bath upgrade
Question:
which of the following best describes a "sunk cost" a "relevant cost" is best described by which of the
following fixed costs that do not differ between two alternatives are which of the following is not a
sunk cost purchase price of vehicle to be traded in fixed costs that may be avoided in the future are
referred to as
Answer:
== total variable costs PLUS: desired profit == cost-plus price costs that were incurred in the past and
cannot be changed expected future costs that differ among alternatives irrelevant to the decision
relevant costs
Question:
the format of the income statement most useful in decision-making is which of the following in a
special sales order decision, the special price must exceed the variable cost of filling the order. in other
words, the special order must have in a special sales order decision, incremental fixed costs that will
be incurred if the special order is accepted are considered to be managers should consider all of the
following when deciding whether to accept a special order, except a manager should always reject a
special order if which would be a consideration for making special orders the cost-plus price is
described by which of the following target total cost is described by which of the following managers
must consider which of the following when pricing a product or service which of the following pairs
are characteristics of price-takers which of the following pairs are characteristics of price-setters
stockholders' expectations of company profits are affected by which of the following which of the
following describes the products and services of companies that are price-setters big-box retailers such
as Lowe's are considered price-takers because methods for a company to meet target cost and the
profit goals if the current cost of the product is higher than the target cost include which of the
following
Answer:
contribution margin format a positive contribution margin relevant to the decision fixed costs that will
not be affected by the order the special order price is less than the variable costs of the order all of the
above total cost plus desired profit revenue at market price minus desired profit
