ACCT 2302 Chapter 7 - Incremental Analysis & Short-Term Decision Making Questions and
Answers Already Passed Latest Update 2025-2026
What is the first step in the decision-making process? - Answers Identify the decision problem.
What is the second step in the decision-making process? - Answers Determine the decision
alternatives.
What should be evaluated in step three of the decision-making process? - Answers The costs
and benefits of the alternatives.
What is the final step in the decision-making process? - Answers Review the results of the
decision.
What type of costs are considered relevant for decision-making? - Answers Costs that occur in
the future and differ between decision alternatives.
What are sunk costs? - Answers Costs that are not relevant to future decisions.
What are irrelevant costs? - Answers Costs incurred in the past that do not differ between
decision alternatives.
What are opportunity costs? - Answers The cost of choosing one alternative over another,
representing foregone benefits.
What are special-order decisions? - Answers Decisions made outside the scope of normal sales,
often requiring incremental analysis.
What should managers consider when making special-order decisions with excess capacity? -
Answers They should evaluate whether to cancel or delay normal sales.
What are the key considerations in make-or-buy decisions? - Answers Whether costs will change,
opportunity costs, and qualitative factors.
What is the significance of specific fixed manufacturing overhead in make-or-buy decisions? -
Answers It is considered relevant costs that are unavoidable and irrelevant.
What should be analyzed in keep-or-drop decisions? - Answers The opportunity costs of using
the production facility and revenues generated by the product line.
What are the direct costs associated with a product line in keep-or-drop decisions? - Answers
Variable costs incurred in manufacturing the product and direct fixed costs.
What must managers analyze in sell-or-process-further decisions? - Answers The difference
between revenues and costs.
What is a constrained resource? - Answers A resource that defines a production bottleneck.
Answers Already Passed Latest Update 2025-2026
What is the first step in the decision-making process? - Answers Identify the decision problem.
What is the second step in the decision-making process? - Answers Determine the decision
alternatives.
What should be evaluated in step three of the decision-making process? - Answers The costs
and benefits of the alternatives.
What is the final step in the decision-making process? - Answers Review the results of the
decision.
What type of costs are considered relevant for decision-making? - Answers Costs that occur in
the future and differ between decision alternatives.
What are sunk costs? - Answers Costs that are not relevant to future decisions.
What are irrelevant costs? - Answers Costs incurred in the past that do not differ between
decision alternatives.
What are opportunity costs? - Answers The cost of choosing one alternative over another,
representing foregone benefits.
What are special-order decisions? - Answers Decisions made outside the scope of normal sales,
often requiring incremental analysis.
What should managers consider when making special-order decisions with excess capacity? -
Answers They should evaluate whether to cancel or delay normal sales.
What are the key considerations in make-or-buy decisions? - Answers Whether costs will change,
opportunity costs, and qualitative factors.
What is the significance of specific fixed manufacturing overhead in make-or-buy decisions? -
Answers It is considered relevant costs that are unavoidable and irrelevant.
What should be analyzed in keep-or-drop decisions? - Answers The opportunity costs of using
the production facility and revenues generated by the product line.
What are the direct costs associated with a product line in keep-or-drop decisions? - Answers
Variable costs incurred in manufacturing the product and direct fixed costs.
What must managers analyze in sell-or-process-further decisions? - Answers The difference
between revenues and costs.
What is a constrained resource? - Answers A resource that defines a production bottleneck.
