BUS5111 Applied Managerial Accounting Unit 6 Graded Quiz — 25
Q&A Verified Answers 2025
Course:
BUS5111 Applied Managerial Accounting — University of the People (UoPeople)
Level:
MBA
Year:
2025/2026
Format:
Graded Quiz Solutions — 25 Q&A with Verified Answers
BUS5111 Unit 6 Graded Quiz — Relevant Costs and Decision
Making
25 Questions with Verified Answers | Score: 96/100
Question 1:
What is the primary characteristic of a "relevant cost" when a manager is conducting differential
analysis between two alternatives?
A) It is a past cost that cannot be changed regardless of the decision made.
B) It is a future cost that remains exactly the same across all alternatives.
C) It is a future cost that differs between the alternatives being considered.
D) It is an allocated common fixed cost that applies to all business segments.
Answer: C
Explanation:
For a cost to be relevant in decision-making, it must meet two criteria: it must be a future cost, and
it must differ between the alternatives being evaluated. Costs that have already been incurred
(sunk costs) or future costs that do not change regardless of the decision are irrelevant and
should be ignored.
Question 2:
, Which of the following statements best describes a "sunk cost" in the context of managerial
decision-making?
A) A cost that has already been incurred and cannot be avoided regardless of a manager's
choices.
B) A potential financial benefit that is given up when one alternative is selected over another.
C) A cost that can be eliminated in whole or in part by choosing one operational alternative.
D) A future cost that varies directly in proportion to the volume of production or sales.
Answer: A
Explanation:
Sunk costs represent historical expenditures that cannot be altered or recovered by current or
future actions. Because they do not change regardless of which alternative a manager chooses,
sunk costs are always strictly irrelevant in decision-making.
Question 3:
Alpha Corp is deciding whether to use an empty warehouse to store its own excess inventory or to
rent it out to a local business for $10,000 per year. In the decision to use the warehouse for its own
inventory, the $10,000 potential rental income represents which type of cost?
A) Sunk cost
B) Avoidable fixed cost
C) Incremental production cost
D) Opportunity cost
Answer: D
Explanation:
An opportunity cost is the potential benefit that is sacrificed when one alternative is chosen over
another. By choosing to use the warehouse for its own inventory, Alpha Corp gives up the
opportunity to earn the $10,000 in rental income, making it a highly relevant opportunity cost in
the decision.
Question 4:
When conducting a make-or-buy (outsourcing) analysis, which of the following costs would
generally be considered completely irrelevant?
A) The direct materials required to manufacture the component internally.
B) Unavoidable allocated general overhead assigned to the component.
Q&A Verified Answers 2025
Course:
BUS5111 Applied Managerial Accounting — University of the People (UoPeople)
Level:
MBA
Year:
2025/2026
Format:
Graded Quiz Solutions — 25 Q&A with Verified Answers
BUS5111 Unit 6 Graded Quiz — Relevant Costs and Decision
Making
25 Questions with Verified Answers | Score: 96/100
Question 1:
What is the primary characteristic of a "relevant cost" when a manager is conducting differential
analysis between two alternatives?
A) It is a past cost that cannot be changed regardless of the decision made.
B) It is a future cost that remains exactly the same across all alternatives.
C) It is a future cost that differs between the alternatives being considered.
D) It is an allocated common fixed cost that applies to all business segments.
Answer: C
Explanation:
For a cost to be relevant in decision-making, it must meet two criteria: it must be a future cost, and
it must differ between the alternatives being evaluated. Costs that have already been incurred
(sunk costs) or future costs that do not change regardless of the decision are irrelevant and
should be ignored.
Question 2:
, Which of the following statements best describes a "sunk cost" in the context of managerial
decision-making?
A) A cost that has already been incurred and cannot be avoided regardless of a manager's
choices.
B) A potential financial benefit that is given up when one alternative is selected over another.
C) A cost that can be eliminated in whole or in part by choosing one operational alternative.
D) A future cost that varies directly in proportion to the volume of production or sales.
Answer: A
Explanation:
Sunk costs represent historical expenditures that cannot be altered or recovered by current or
future actions. Because they do not change regardless of which alternative a manager chooses,
sunk costs are always strictly irrelevant in decision-making.
Question 3:
Alpha Corp is deciding whether to use an empty warehouse to store its own excess inventory or to
rent it out to a local business for $10,000 per year. In the decision to use the warehouse for its own
inventory, the $10,000 potential rental income represents which type of cost?
A) Sunk cost
B) Avoidable fixed cost
C) Incremental production cost
D) Opportunity cost
Answer: D
Explanation:
An opportunity cost is the potential benefit that is sacrificed when one alternative is chosen over
another. By choosing to use the warehouse for its own inventory, Alpha Corp gives up the
opportunity to earn the $10,000 in rental income, making it a highly relevant opportunity cost in
the decision.
Question 4:
When conducting a make-or-buy (outsourcing) analysis, which of the following costs would
generally be considered completely irrelevant?
A) The direct materials required to manufacture the component internally.
B) Unavoidable allocated general overhead assigned to the component.
