7. ABC Company temporarily has unused production capacity. The idle plant facilities can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more...

Extracted text: 7. ABC Company temporarily has unused production capacity. The idle plant facilities can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more than its c. Variable costs plus any opportunity cost of the idle facilities. d. Indirect costs plus any opportunity cost of the idle facilities. a. Fixed costs. b. Variable costs. 8. In a make or buy situation, which of the following qualitative factors is usually considered? a. Special technology. b. Skilled labor. c. Special materials requirements. d. Quality control. e. All of these. 9. Which of the following qualitative factors favors the buy choice in a make or buy decision? a. Maintaining a long-run relationship with suppliers. b. Quality control is critical. c. Utilization of idle capacity. D. All of these. 10. In deciding whether to manufacture a part or buy it from an outside vendor, a cost that is irrelevant to the short-run decision is a. Direct labor. b. Variable overhead c. Fixed overhead that will be avoided if the part is bought from an outside vendor. d. Fixed overhead that will continue even if the part is bought from the outside vendor. 11. In considering a special order situation that will enable a company to make use of presently idle capacity, which of the following costs would be irrelevant? a. Materials. b. Depreciation. c. Direct labor. d. Variable overhead. 12. Which of the following cost allocation methods would be used to determine the lowest price that could be quoted for special order that would utilize idle capacity within a production area? a. Job order. b. Process. c. Variable. d. Standard. 13. Costs which will require the expenditure of cash or the incurrence of a liability as a consequence of a management decision a. Direct costs. b. Avoidable costs. c. Out-of-pocket costs. d. Sunk costs. e. Imputed costs. 14. An income statement is prepared as an internal report. Under which of the following methods would the term contribution margin appear? Absorption costing Direct costing No No a. b. No Yes Yes No с. d. Yes Yes