Accounting 2037 - Exam 3 Wright
Questions and Answers 2025-2026.
Incremental costs - Answer costs that are different under alternative choices. costs that are
the same under either motion are not incremental and are not relevant
Relevant benefits - Answer incremental reward from choosing one option over the other
Profit - Answer Rev - FC - VC = profit
(Fc-VC)= expenses
What costs matter when making decisions about Product Mix with Constrained Sources -
Answer - SP
- DM
- DL
- CM
- demand
- profit
What costs matter when making decisions about keeping or replacing equipment - Answer -
market value of old equipment
- cost of buying new equipment
- different operating cost
- efficiency
What costs DO NOT matter when making decisions about keeping or replacing equipment -
Answer - sunk costs (like cost of current machine)
- accumulated dep
CapEx methods that ignore TVM - Answer (shorter term decisions)
- payback period: used to explain quickly when we ill get money
- accounting rate of return: used less often
Questions and Answers 2025-2026.
Incremental costs - Answer costs that are different under alternative choices. costs that are
the same under either motion are not incremental and are not relevant
Relevant benefits - Answer incremental reward from choosing one option over the other
Profit - Answer Rev - FC - VC = profit
(Fc-VC)= expenses
What costs matter when making decisions about Product Mix with Constrained Sources -
Answer - SP
- DM
- DL
- CM
- demand
- profit
What costs matter when making decisions about keeping or replacing equipment - Answer -
market value of old equipment
- cost of buying new equipment
- different operating cost
- efficiency
What costs DO NOT matter when making decisions about keeping or replacing equipment -
Answer - sunk costs (like cost of current machine)
- accumulated dep
CapEx methods that ignore TVM - Answer (shorter term decisions)
- payback period: used to explain quickly when we ill get money
- accounting rate of return: used less often
