ACNT 2402 Chapter 10 -Questions and Answers 2023& study guide with complete solution

True/False 1. Only future costs that differ between alternatives are relevant in decision making. Answer: T 2. Future costs that do not differ between the alternatives in a decision are avoidable costs. Answer: F 3. The book value of a machine, as shown on the balance sheet, is not relevant in a decision concerning the replacement of that machine by another machine. (Ignore taxes.) Answer: T 4. A cost that is relevant in one decision may not be relevant in another decision. Answer: T 5. Opportunity costs are not usually recorded in the accounts of a business. Answer: T 6. A cost that can be avoided by choosing one alternative over another is not relevant for decision purposes. Answer: F 7. The book value of old equipment is a relevant cost in a decision to replace that equipment. (Ignore taxes.) Answer: F 8. An avoidable cost is a cost that can be completely eliminated irrespective of whether one chooses one alternative or another in a decision. Answer: F 9. A fixed cost cannot be a differential cost. Answer: F: 10. One of the advantages of allocating common fixed costs to a product is that such allocations more accurately reflect the product’s true profitability. Answer: F 11. Fixed costs may or may not be sunk costs. Answer: T 12. A prod