ACCT 2302 Exam #3 Questions with Correct Answers Latest Update 2025/2026
Which is the first step in the management decision-making process?
a) Identify the problem and assign responsibility.
b) Make a decision.
c) Determine and evaluate possible courses of action.
d) Review results of the decision. - Answers a) Identify the problem and assign responsibility.
Which of the following will always be a relevant cost?
a) Fixed cost
b) Sunk cost
c) Variable cost
d) Opportunity cost - Answers d) Opportunity cost
Costs that will differ between alternatives and influence the outcome of a decision are
a) sunk costs.
b) relevant costs.
,c) product costs.
d) unavoidable costs. - Answers b) relavant costs.
Alvarez Company is considering the following alternatives:
Alternative A Alternative B
Revenues $50,000 $60,000
Variable costs 30,000 30,000
Fixed costs 10,000 16,000
What is the incremental profit?
a) $0
b) $6,000
c) $4,000
d) $10,000 - Answers c) $4,000
Which of the following is an irrelevant cost?
a) A sunk cost
b) An opportunity cost
,c) An avoidable cost
d) An incremental cost - Answers a) A sunk cost
Incremental analysis would be appropriate for
a) acceptance of an order at a special price.
b) a retain or replace equipment decision.
c) a sell or process further decision.
d) all of these answers are correct. - Answers d) all of these answers are correct.
A company is considering the following alternatives:
Alternative 1 Alternative 2
Revenues $120,000 $120,000
Variable costs 60,000 70,000
Fixed costs 35,000 35,000
Which of the following are relevant in choosing between the alternatives?
a) Revenues
b) Variable costs
, c) Fixed costs
d) Variable costs and fixed costs - Answers b) Variable costs
It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale
which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each.
Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has
sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what
will be the effect on net income?
a) $6,000 increase
b) $6,000 decrease
c) $9,000 decrease
d) $45,000 increase - Answers a) $6,000 increase
Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price
of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold.
The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a
foreign market which would not affect its present sales. If the company has sufficient capacity
to produce the additional units, acceptance of the special order would affect net income as
follows:
a) Income would increase by $40,000.
b) Income would decrease by $8,000.
c) Income would increase by $140,000.
Which is the first step in the management decision-making process?
a) Identify the problem and assign responsibility.
b) Make a decision.
c) Determine and evaluate possible courses of action.
d) Review results of the decision. - Answers a) Identify the problem and assign responsibility.
Which of the following will always be a relevant cost?
a) Fixed cost
b) Sunk cost
c) Variable cost
d) Opportunity cost - Answers d) Opportunity cost
Costs that will differ between alternatives and influence the outcome of a decision are
a) sunk costs.
b) relevant costs.
,c) product costs.
d) unavoidable costs. - Answers b) relavant costs.
Alvarez Company is considering the following alternatives:
Alternative A Alternative B
Revenues $50,000 $60,000
Variable costs 30,000 30,000
Fixed costs 10,000 16,000
What is the incremental profit?
a) $0
b) $6,000
c) $4,000
d) $10,000 - Answers c) $4,000
Which of the following is an irrelevant cost?
a) A sunk cost
b) An opportunity cost
,c) An avoidable cost
d) An incremental cost - Answers a) A sunk cost
Incremental analysis would be appropriate for
a) acceptance of an order at a special price.
b) a retain or replace equipment decision.
c) a sell or process further decision.
d) all of these answers are correct. - Answers d) all of these answers are correct.
A company is considering the following alternatives:
Alternative 1 Alternative 2
Revenues $120,000 $120,000
Variable costs 60,000 70,000
Fixed costs 35,000 35,000
Which of the following are relevant in choosing between the alternatives?
a) Revenues
b) Variable costs
, c) Fixed costs
d) Variable costs and fixed costs - Answers b) Variable costs
It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale
which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each.
Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has
sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what
will be the effect on net income?
a) $6,000 increase
b) $6,000 decrease
c) $9,000 decrease
d) $45,000 increase - Answers a) $6,000 increase
Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price
of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold.
The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a
foreign market which would not affect its present sales. If the company has sufficient capacity
to produce the additional units, acceptance of the special order would affect net income as
follows:
a) Income would increase by $40,000.
b) Income would decrease by $8,000.
c) Income would increase by $140,000.
