1
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MBA 620 Final Exam Questions and
Answers (100% Correct Answers) Already
Graded A+
Future costs that differ among competing decision alternatives
(a.k.a., differential or incremental costs) [ ANS: ] relevant costs
Revenues that differ when one alternative is selected over
another. For example, if a company is deciding whether to keep
all customers (Alternative 1) or drop certain less profitable
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customers (Alternative 2), difference between total revenue for
Alternative 1 and total revenue for Alternative 2. [ ANS: ]
differential revenues
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Costs that differ when one alternative is selected over another. For
example, if a company is deciding whether to make a product
internally (Alternative 1) or outsource production (Alternative 2),
difference between costs for Alternative 1 and Alternative 2 [ ANS:
] differential costs
Reviewing the differential revenues and costs for alternative
courses of action; this is used by management to evaluate
different alternatives and to select the best course of action [ ANS:
] differential analysis
Means a company is deciding whether to make a product
internally or buy the product from an outside firm. Differential
analysis helps managers focus solely on the costs that are relevant
to the make-or-buy decision. Variable production costs are
typically differential costs. Fixed production costs must be
reviewed on a case-by-case basis to determine which costs are
differential and which are not. Managers typically select the
alternative with the lowest cost. [ ANS: ] make-or-buy decision
, 2
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A cost that can be avoided, or eliminated, if one alternative is
chosen over another (also differential costs) [ ANS: ] avoidable
cost
How is differential analysis used in deciding whether to keep or
drop product lines?
A ____________ __________ _________ ___________ is prepared, which
includes information for each product line and a total column for
all product limes. Another _____________ _____________ is prepared
in the same format, which excludes the product line the company
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would like to drop. Decision makers select the alternative with the
highest ___________ [ ANS: ] contribution margin income
statement, income statement, profit
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Can be traced directly to a product line, and are typically
avoidable if the product line is eliminated [ ANS: ] direct fixed
costs
Cannot be traced directly to a product line, and are assigned to
product lines using an allocation process. These costs are typically
not differential costs since they are allocated to remaining
products if a product line is dropped [ ANS: ] allocated fixed costs
Managers often use ________ as a determining factor for deciding
whether to keep or drop customers and products [ ANS: ] profit
For product line decisions, _______ and _______ are assigned to
individual product lines. For customer decisions, both are assigned
to individual customers. [ ANS: ] revenues and costs
Is used for both product line and customer decisions to asses the
profitability of various alternatives [ ANS: ] contribution margin
income statement
What two assumptions must be considered when evaluating
special order scenarios? [ ANS: ] capacity and pricing
For Expert help and assignment solutions, +254707240657
MBA 620 Final Exam Questions and
Answers (100% Correct Answers) Already
Graded A+
Future costs that differ among competing decision alternatives
(a.k.a., differential or incremental costs) [ ANS: ] relevant costs
Revenues that differ when one alternative is selected over
another. For example, if a company is deciding whether to keep
all customers (Alternative 1) or drop certain less profitable
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customers (Alternative 2), difference between total revenue for
Alternative 1 and total revenue for Alternative 2. [ ANS: ]
differential revenues
Guru01 - Stuvia
Costs that differ when one alternative is selected over another. For
example, if a company is deciding whether to make a product
internally (Alternative 1) or outsource production (Alternative 2),
difference between costs for Alternative 1 and Alternative 2 [ ANS:
] differential costs
Reviewing the differential revenues and costs for alternative
courses of action; this is used by management to evaluate
different alternatives and to select the best course of action [ ANS:
] differential analysis
Means a company is deciding whether to make a product
internally or buy the product from an outside firm. Differential
analysis helps managers focus solely on the costs that are relevant
to the make-or-buy decision. Variable production costs are
typically differential costs. Fixed production costs must be
reviewed on a case-by-case basis to determine which costs are
differential and which are not. Managers typically select the
alternative with the lowest cost. [ ANS: ] make-or-buy decision
, 2
For Expert help and assignment solutions, +254707240657
A cost that can be avoided, or eliminated, if one alternative is
chosen over another (also differential costs) [ ANS: ] avoidable
cost
How is differential analysis used in deciding whether to keep or
drop product lines?
A ____________ __________ _________ ___________ is prepared, which
includes information for each product line and a total column for
all product limes. Another _____________ _____________ is prepared
in the same format, which excludes the product line the company
© 2025 Assignment Expert
would like to drop. Decision makers select the alternative with the
highest ___________ [ ANS: ] contribution margin income
statement, income statement, profit
Guru01 - Stuvia
Can be traced directly to a product line, and are typically
avoidable if the product line is eliminated [ ANS: ] direct fixed
costs
Cannot be traced directly to a product line, and are assigned to
product lines using an allocation process. These costs are typically
not differential costs since they are allocated to remaining
products if a product line is dropped [ ANS: ] allocated fixed costs
Managers often use ________ as a determining factor for deciding
whether to keep or drop customers and products [ ANS: ] profit
For product line decisions, _______ and _______ are assigned to
individual product lines. For customer decisions, both are assigned
to individual customers. [ ANS: ] revenues and costs
Is used for both product line and customer decisions to asses the
profitability of various alternatives [ ANS: ] contribution margin
income statement
What two assumptions must be considered when evaluating
special order scenarios? [ ANS: ] capacity and pricing
