Accounting 2037 - Exam 3 Wright Questions and Answers .

Incremental costs - Answer costs that are different under alternative choices. costs that are the same under either motion are not incremental and are not relevant Relevant benefits - Answer incremental reward from choosing one option over the other Profit - Answer Rev - FC - VC = profit (Fc-VC)= expenses What costs matter when making decisions about Product Mix with Constrained Sources - Answer - SP - DM - DL - CM - demand - profit What costs matter when making decisions about keeping or replacing equipment - Answer - market value of old equipment - cost of buying new equipment - different operating cost - efficiency What costs DO NOT matter when making decisions about keeping or replacing equipment - Answer - sunk costs (like cost of current machine) - accumulated dep CapEx methods that ignore TVM - Answer (shorter term decisions) - payback period: used to explain quickly when we ill get money - accounting rate of return: used less often CapEx methods that consider TVM - Answer - NPV - IRR (internal rate of return)