ACC 241 Exam 3 ASU Dallmus
Questions with complete solution
2025/2026
Relevant costs are costs that differ between alternatives.When making the decision, the company
should consider relevant costs.
Relevant costs are also called differential costs, incremental costs, or avoidable costs. - correct answer
✔relevant costs
-Whether excess capacity exists
-Whether the special order will affect regular sales in the long run
-Whether the special price will be high enough to cover incremental costs of filling the order - correct
answer ✔Analyzing special orders
When an item first comes on the market it is generally higher than when it's been on the market for a
while
(cost plus, target costing) - correct answer ✔product pricing
A company should drop the product line only if avoidable cost savings are greater than the contribution
margin lost. - correct answer ✔How to analyze dropping a product line decision?
Decisions involve deciding whether to perform a particular function in-house versus buying it from and
outside supplier
- If the incremental costs of making exceed the incremental costs of buying, then the company should
buy it. - correct answer ✔Make versus Buy decisions
For sell as is or process further decisions, if the incremental revenue from processing further exceeds
the incremental cost of processing further, then the correct decision is to process further. - correct
answer ✔Sell as is or process further decisions
, A comprehensive financial plan consisting of various individual budgets; done at the beginning of a
period - correct answer ✔master budget
1. Forces managers to plan
2. Facilitates coordination and communication within the business
3. Helps motivate personnel throughout organization to meet planned objectives
4. Provides a standard for performance evaluation - correct answer ✔Benefits of Budgeting
cost center, revenue center, profit center, investment center - correct answer ✔Types of responsibility
centers
a business segment whose manager has control over cost but has no control over revenue or
investments in operating assets - correct answer ✔cost center
a responsibility center in which managers are responsible for generating revenue - correct answer
✔revenue center
separate company unit responsible for its own costs and profits - correct answer ✔profit center
a division that generates revenues, incurs costs, and controls the investment of available funds.
-managers are evaluated on profitability of divisions and efficient use of assets.
Ex: subsidiary companies, Stand-alone divisions of a company - correct answer ✔investment center
(System for evaluating the performance of each responsibility center and its manager.)
is a system for evaluating the performance of each responsibility center and its manager. Responsibility
accounting performance reports compare plans (budgets) with actual results for each center. Superiors
then evaluate how well each manager controlled the operations for which he or she was responsible.
Questions with complete solution
2025/2026
Relevant costs are costs that differ between alternatives.When making the decision, the company
should consider relevant costs.
Relevant costs are also called differential costs, incremental costs, or avoidable costs. - correct answer
✔relevant costs
-Whether excess capacity exists
-Whether the special order will affect regular sales in the long run
-Whether the special price will be high enough to cover incremental costs of filling the order - correct
answer ✔Analyzing special orders
When an item first comes on the market it is generally higher than when it's been on the market for a
while
(cost plus, target costing) - correct answer ✔product pricing
A company should drop the product line only if avoidable cost savings are greater than the contribution
margin lost. - correct answer ✔How to analyze dropping a product line decision?
Decisions involve deciding whether to perform a particular function in-house versus buying it from and
outside supplier
- If the incremental costs of making exceed the incremental costs of buying, then the company should
buy it. - correct answer ✔Make versus Buy decisions
For sell as is or process further decisions, if the incremental revenue from processing further exceeds
the incremental cost of processing further, then the correct decision is to process further. - correct
answer ✔Sell as is or process further decisions
, A comprehensive financial plan consisting of various individual budgets; done at the beginning of a
period - correct answer ✔master budget
1. Forces managers to plan
2. Facilitates coordination and communication within the business
3. Helps motivate personnel throughout organization to meet planned objectives
4. Provides a standard for performance evaluation - correct answer ✔Benefits of Budgeting
cost center, revenue center, profit center, investment center - correct answer ✔Types of responsibility
centers
a business segment whose manager has control over cost but has no control over revenue or
investments in operating assets - correct answer ✔cost center
a responsibility center in which managers are responsible for generating revenue - correct answer
✔revenue center
separate company unit responsible for its own costs and profits - correct answer ✔profit center
a division that generates revenues, incurs costs, and controls the investment of available funds.
-managers are evaluated on profitability of divisions and efficient use of assets.
Ex: subsidiary companies, Stand-alone divisions of a company - correct answer ✔investment center
(System for evaluating the performance of each responsibility center and its manager.)
is a system for evaluating the performance of each responsibility center and its manager. Responsibility
accounting performance reports compare plans (budgets) with actual results for each center. Superiors
then evaluate how well each manager controlled the operations for which he or she was responsible.
