Reference no: EM132547195

Question 1: Allocate each of the following costs as differential cost or non-differential costs; (1) variable production costs; (2) equipment lease cost; (3) facility location lease costs; (4) an at-will (no contract) supervisor's salary; (5) a long-term contract (five-year contract) supervisor's salary.

a. Variable production costs, equipment lease costs, and an at-will supervisor's salary and differential costs. Facility location lease costs and a contract supervisor's salary and non-differential costs.

b. Variable production costs are differential lease costs. Equipment lease costs, facility location lease costs, an at-will supervisor's salary, and a contract supervisor's salary are non-differential costs.

c. Variable production costs and an at-will supervisor's salary are differential costs. Equipment lease costs, facility location lease costs, and a contract supervisor's salary are non-differential costs.

d. Variable costs and equipment lease costs are differential costs. Facility location lease costs, an at-will supervisor's salary, and a contract supervisor's salary are non-differential costs.

Question 2: An additional cost that results from a particular course of action is known as a(an):

a. opportunity cost

b. net present cost

c. sunk cost

d.incremental cost

Question 3: Differential analysis can be used for:

a. Make or buy products decisions

b. Accept or reject special customer order decisions

c. Keep or drop product line decision

d. all of the above