Answered: Problem 4 a. What is the difference…

Problem 4 a. What is the difference between relevant, opportunity and sunk costs? b. Why are fixed costs not included in special order decisions? C. What are the steps involved in decision making?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 2MC: Which type of incurred costs are not relevant in decision-making (i.e., they have no bearing on...

See similar textbooks

Related questions

Q: Is corrective action always necessary when actual costs are higher than standard costs

A: A company which manufactures products and goods keeps a sharp eye on its costs. When the actual cost…

Q: 1.Discuss sunk costs and opportunity cost.

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: 6. What are costs that vary in proportions to changes in the activity base?

A: In cost accounting, different types of costs are incurred and accounted for. Some costs do not…

Q: 3) As you know in the short term decision making the management will consider the relevant cost of…

A: In the short term decision making the management will consider the relevant cost of the cost element…

Q: Which of the following statements is correct about fixed costs? a. Fixed costs vary on per unit…

A: SOLUTION EXPLANATION- 1-FIXED COST DOES NOT CHANGE BASED ON ACTIVITY. 2-THE COST WILL STAY THE SAME…

Q: The amount of increase or decrease in cost that is expected from a particular course of action as…

A: Discretionary cost: A discretionary expense is a cost that a business or household can survive…

Q: 4. Please state the differences between relevant, opportunity and sunk costs.

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: An example of a cost that is irrelevant to a future decision is a(n) a. Differential cost b.…

A: Costs are the amount of expenditure which has been and to be incurred on the project. There are…

Q: 18. Classifying a cost as either direct or indirect depends upon: whether the cost can be…

A: Cost: It refers to the aggregated amount that is spent on manufacturing a product.

Q: Requirement 3. How can you obtain better estimates of fixed and variable costs? Why would these…

A: Fixed cost are those cost which are fixed cost for current period they don't change with change in…

Q: What is the relevant range? What role does the relevant range concept play in explaining how costs…

A: Relevant range refers to the level of the activity which represents the maximum and minimum limits…

Q: QUESTION 5 When trying to decide between multiple alternatives, a cost that occurs in the future and…

A: Relevant cost means the cost which is considered while taking the decision. All variable cost and…

Q: ________ are the costs associated with not choosing the other alternative.A. Sunk costsB.…

A: The term "cost" alludes to the overall expense incurred in the production of goods and services as…

Q: 1. Relevant of differential cost analysis a takes all variable and fixed costs into account to…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Q- 8: opportunity cost, and sunk cost. Define the following terms: differential cost,

Q: Which of the following statements is most correct about step costs? they have the same behaviour…

A: Marginal costing is the one by which the cost of additional unit production is calculated. Under…

Q: “Sunk costs are easy to spot—they’re simply the fixed costs associated with a decision.” Do…

A: Sunk cost: Sunk cost is the cost that has been incurred as a result of past events and such cost…

Q: What is meant by an activity base when dealing with variable costs? Give several examples of…

A: Note: Since you have posted multiple questions, we will solve the first question. Please submit a…

Q: costs that have characteristics of both variable and fixed cost

A: We know that Fixed costs are costs that remain constant irrespective of the level of activity .…

Q: QUESTION 7 Sunk costs, unitising costs, how costs are allocated, and leaving out opportunity costs…

A: QUESTION 7 Sunk costs, unitising costs, how costs are allocated, and leaving out opportunity costs…

Q: Which of the following costs are irrelevant to business decisions? Avoidable costs Costs that…

A: Sunk costs are irrelevant to business decisions.

Q: Which of the following is true of relevant costs? a.Relevant costs are sunk costs that alter future…

A: Sunk cost is the cost which was incurred in past.It is not relevant for decision making.

Q: 1. Select two decisions-one common to a manufacturer and the other common to a service…

A: Manufacturing Entity: A manufacturing business is defined as any firm that manufactures completed…

Q: Future costs that differ across alternatives are: a. Opportunity costs b. Sunk costs c. Relevant…

A: Cost is the amount of expense incurred on particular items or activities.

Q: Which of the following costs are irrelevant to business decisions? a. Avoidable costs b. Costs that…

A: Irrelevant cost: Irrelevant cost does not affect the decision making since they are not in the…

Q: . What factors determine the relevance of information to decision making? 2. What are sunk costs,…

A: Majorly decision-making managers have to consider the relevant information which is associated with…

Q: Costs that will differ between alternatives and influence the outcome of a decision ar Select one: O…

A: Relevant costs are the managerial costs that are incurred only to make specific business decisions.…

Q: Define relevant costs. Why are historical costs irrelevant?

A: Relevant cost: A cost that is specific in the managerial decision making are called relevant cost.…

Q: 5) Choosing to outsource a component of a product or manufacture it internally is an example of…

A: The given scenario is an example of make or buy decision.

Q: A cost that cannot be changed because it arises from a past decision and is irrelevant to future…

A: Definition:

Q: 2. When are restructuring costs recognized?

A: Definition: Cost control: In the budgeting process to increase the profit, the management identifies…

Q: _______________ are the costs associated with not choosing the other alternative Sunk costs

A: Relevant costs: These are the costs which are relevant to a decision

Q: Which of the following is not a reason for cost allocation? A. Maximization of direct cost…

A: Cost allocation is a process of allocating the cost of different nature or similar nature into :…

Question

Problem 4
a. What is the difference between relevant, opportunity and sunk costs?
b. Why are fixed costs not included in special order decisions?
C.
What are the steps involved in decision making?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Which type of incurred costs are not relevant in decision-making (i.e., they have no bearing on future events) and should be excluded in decision-making? A. avoidable costs B. unavoidable costs C. sunk costs D. differential costs
Which of the following costs can be ignored when making a decision?a. Opportunity costs. b. Differential costs. c. Sunk costs. d. Relevant costs.
1. What factors determine the relevance of information to decision making? 2. What are sunk costs, and why are they not relevant in making decisions? 3. What information is relevant in an outsourcing decision?
Which type of incurred costs are not relevant in decision-making (i.e., they have no bearing on future events) and should be excluded in decision-making? Group of answer choices A. avoidable costs B. unavoidable costs C. sunk costs D. differential costs
Which type of incurred costs are not relevant in decision-making (i.e., they have no bearing on future events) and should be excluded in decision-making?A. avoidable costsB. unavoidable costsC. sunk costsD. differential costs
What is an opportunity cost and why should it be included when making decisions?
Is there a difference between relevant costs and incremental costs? Explain. Identify at least two (2) irrelevant costs in a make vs buy decision
In a decision analysis situation, which one of the following costs is generally not relevant to the decision?A. Differential cost.B. Avoidable cost.C. Incremental cost.D. Historical cost.
Which of the following costs is relevant in decisionmaking? committed costsaccounting costscash costshistorical costs
Which of the following is an irrelevant cost? Group of answer choices An avoidable cost An incremental cost A sunk cost An opportunity cost
What do you know about relevant and irrelevant cost? Describe.
Is there a difference between relevant costs and incremental costs? Explain