ACG 2071 Final Exam Questions with Correct Answers

ACG 2071 Final Exam Questions with Correct Answers


Question 1:
Differential Cost
Answer:
A difference in cost between any two alternatives


Question 2:
Differential Revenue
Answer:
A difference in revenue between any two alternatives


Question 3:
Avoidable Cost
Answer:
A cost that can be eliminated by choosing one alternative over another


Question 4:
Sunk Cost
Answer:
A cost that has already been incurred and cannot be avoided regardless of what a manager
decides to do


Question 5:
Drop Product Line
Answer:
Locating expenses and/or revenues that will be eliminated if a single product is dropped from
production


Question 6:
Make or Buy Decisions
Answer:
Determining whether it's smarter to Make or Buy a product based on expenses and buying
prices

, Question 7:
Special Order
Answer:
A one time order that is not considered part of the company's normal ongoing business


Question 8:
Contained Resource
Answer:
Determine what product has the highest CM per unit (CM/min to produce OR CM/lb per unit)


Question 9:
Sell or Proccess Further
Answer:
Determine if its more profitable to sell a product or continue to produce further
(Rev-Cost=Profit)


Question 10:
Calculate Working Capital
Answer:
Current Assets - Current Liabilities


Question 11:
Cost of Capital
Answer:
The average rate of return that the company must pay to its long term creditors and its
shareholders for the use of their funds


Question 12:
Calculate Current Ratio
Answer:
Current Assets/ Current Liabilities


Question 13:
Calculate Acid Test Ratio
Answer:
Quick Assets/ Current Liabilities (QA Eliminates Inventory and PrePaids)