Accounting 231 Exam 4 Gill WSU
Question and answers correctly
solved 2025/2026
Difference between Relevant and Irrelevant Costs - correct answer ✔Relevant Cost affect future cash
flows.
Irrelevant cost are not taken into consideration for decisions
What is a Differential Cost? - correct answer ✔A future cost that differs between any 2 alternatives
What is an Avoidable Cost? - correct answer ✔A cost that can be eliminated by choosing one
alternative over another in a decision. This term is synonymous with differential cost and relevant cost
What is a Sunk Cost? - correct answer ✔A cost that has already been incurred and cannot be changed
by any decision made now or in the future
What is an Opportunity Cost? - correct answer ✔The potential benefit that is given up when one
alternative is selected over another.
What is an Allocated Common Cost? - correct answer ✔Cost that are assigned to multiple different
products, processes and activities.
What are Joint Costs - correct answer ✔Costs that are incurred up to the split-off point in a process
that produces joint products
What is Contribution Margin? - correct answer ✔That profit made from subtracting the variable
expenses from the sales. Could also be shown in ratio form, by dividing Sales from the contribution
margin
Question and answers correctly
solved 2025/2026
Difference between Relevant and Irrelevant Costs - correct answer ✔Relevant Cost affect future cash
flows.
Irrelevant cost are not taken into consideration for decisions
What is a Differential Cost? - correct answer ✔A future cost that differs between any 2 alternatives
What is an Avoidable Cost? - correct answer ✔A cost that can be eliminated by choosing one
alternative over another in a decision. This term is synonymous with differential cost and relevant cost
What is a Sunk Cost? - correct answer ✔A cost that has already been incurred and cannot be changed
by any decision made now or in the future
What is an Opportunity Cost? - correct answer ✔The potential benefit that is given up when one
alternative is selected over another.
What is an Allocated Common Cost? - correct answer ✔Cost that are assigned to multiple different
products, processes and activities.
What are Joint Costs - correct answer ✔Costs that are incurred up to the split-off point in a process
that produces joint products
What is Contribution Margin? - correct answer ✔That profit made from subtracting the variable
expenses from the sales. Could also be shown in ratio form, by dividing Sales from the contribution
margin
