21. Additional costs incurred if a company pursues a certain course of action are sunk costs.
22. If accepting additional business would cause existing sales to decline, the offer should always be declined.
23. Contribution margin lost from a decline in sales is an opportunity cost.
24. Additional power for operating machines, extra supplies, and added cleanup costs are examples of incremental overhead costs.
25. Employee morale, timeliness of delivery, and the reactions of customers are examples of nonfinancial factors that should be considered when making a managerial decision.
26. Costs already incurred in manufacturing the units of a product that do not meet quality standards are relevant costs in a scrap or rework decision.
27. A company has already incurred a $100 cost in partially producing its two products. Their selling prices when partially and fully processed are shown in the table below with the additional costs necessary to finish their processing. Based on this information, the company should process only product A further.
Product
|
Unfinished Selling Price
|
Finished Selling Price
|
Further Processing Costs
|
A
|
$200
|
$300
|
$120
|
B
|
75
|
130
|
45
|
28. A company has already incurred a $600 cost in partially producing its two products. Their selling prices when partially and fully processed are shown in the following table with the additional costs necessary to finish their processing. Based on this information, the company should process both products further.
Product
|
Unfinished Selling Price
|
Finished Selling Price
|
Further Processing Costs
|
A
|
$425
|
$500
|
$70
|
B
|
375
|
400
|
20
|
29. Sales mix refers to the combination of products sold by a company.
30. To maximize profit when a constrained resource exists, management should produce the sales mix that has the highest contribution margin per unit of scarce resource.