Management Accountants Are Frequently Asked to Analyze Various Decision Situations

Multiple Choice

Management accountants are frequently asked to analyze various decision situations including the following:

● The cost of a special device that is necessary if a special order is accepted.
● The cost proposed annually for the plant service for the grounds at corporate headquarters.
● Joint production costs incurred, to be considered in a sell-or-process-further decision.
● The costs associated with alternative uses of plant space, to be considered in a make/buy decision.
● The cost of obsolete inventory acquired several years ago, to be considered in a keep-versus-disposal decision.

The costs described in situations I and IV above are examples of:

A) Prime costs.
B) Sunk costs.
C) Discretionary costs.
D) Relevant costs.
E) Opportunity costs.