Reference no: EM13533935

For decision making, a list of relevant costs:
A. will only include future costs.
B. will help the decision maker concentrate on the pertinent data.
C. all of these responses apply to relevant data for decision making.
D. will only include costs that differ among the alternatives.


Jim's 5-year-old Chevrolet requires repairs estimated at $3,000 to make it roadworthy again. His friend, Julie, suggested
that he should buy a 5-year-old used Honda instead for $3,000 cash. Julie estimated the following costs for the two cars:
Chevrolet Honda
Acquisition cost $15,000 $3,000
Repairs $ 3,000
Annual operating costs (Gas, maintenance, insurance) $2,280 $2,100
The cost NOT relevant for this decision is the:
A. acquisition cost of the Honda B. repairs to the Chevrolet.
C. acquisition cost of the Chevrolet D. annual operating costs of the Honda.

Please show all work.
Jim's 5-year-old Chevrolet requires repairs estimated at $3,000 to make it roadworthy again. His friend, Julie, suggested
that he should buy a 5-year-old used Honda instead for $3,000 cash. Julie estimated the following costs for the two cars:
Chevrolet Honda
Acquisition cost $15,000 $3,000
Repairs $ 3,000
Annual operating costs (Gas, maintenance,
insurance) $2,280 $2,100
What should Jim do? What is the net advantage in the first year?
A. Fix the Chevrolet; $5,518. B. Fix the Chevrolet; $5,280.
C. Buy the Honda; $180. D. Buy the Honda; $9,780.

Answer the following questions using the information below:
Calculate the Division operating income for the Alpha Shoe Company which manufactures only one type of shoe and has
two divisions, the Sole Division, and the Assembly Division. The Sole Division manufactures soles for the Assembly
Division, which completes the shoe and sells it to retailers. The Sole Division "sells" soles to the Assembly Division. The
market price for the Assembly Division to purchase a pair of soles is $40. (Ignore changes in inventory.) The fixed costs for
the Sole Division are assumed to be the same over the range of 40,000-100,000 units. The fixed costs for the Assembly
Division are assumed to be $14 per pair at 100,000 units.
Sole's costs per pair of soles are:
Direct materials $8
Direct labor $6
Variable overhead $4
Division fixed costs $2
Assembly's costs per completed pair of shoes are:
Direct materials $12
Direct labor $4
Variable overhead $2
Division fixed costs $14
20. What is the transfer price per pair of soles from the Sole Division to the Assembly Division if the method used to place a
value on each pair of soles is 180% of variable costs?
A. $25.20 B. $57.60 C. $32.40 D. $28.80