81. Which of the following would be considered a sunk cost?
A. Purchase of new equipment
B. Equipment rental for the production area
C. Net book value of obsolete equipment that has no market value
D. Depreciation expense
82. All of the following should be considered in a make or buy decision except
A. cost savings
B. quality issues with the supplier
C. future growth in the plant and other production opportunities
D. the supplier will make a profit that would no longer belong to the business
83. A business may decide to accept additional business at a special price for all of the following reasons except
A. if additional sales will not conflict with regular sales.
B. if additional sales will increase differential income.
C. if there is an increase to sales only if fixed expenses are not increased.
D. if there is an increase to sales even if fixed expenses are also increased.
84. A practical approach which is frequently used by managers when setting normal long-run prices is the:
A. cost-plus approach
B. economic theory approach
C. price graph approach
D. market price approach
85. Which of the following is NOT a cost concept commonly used in applying the cost-plus approach to product pricing?
A. Total cost concept
B. Product cost concept
C. Variable cost concept
D. Fixed cost concept
86. In using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup?
A. Total selling and administrative expenses plus desired profit
B. Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit
C. Total costs plus desired profit
D. Desired profit
87. In using the product cost concept of applying the cost-plus approach to product pricing, what is included in the markup?
A. Desired profit
B. Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit
C. Total costs plus desired profit
D. Total selling and administrative expenses plus desired profit
88. In using the variable cost concept of applying the cost-plus approach to product pricing, what is included in the markup?
A. Total costs plus desired profit
B. Desired profit
C. Total selling and administrative expenses plus desired profit
D. Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit
89. What cost concept used in applying the cost-plus approach to product pricing covers selling expenses, administrative expenses, and desired profit in the "markup"?
A. Total cost concept
B. Product cost concept
C. Variable cost concept
D. Sunk cost concept
90. What cost concept used in applying the cost-plus approach to product pricing includes only desired profit in the "markup"?
A. Product cost concept
B. Variable cost concept
C. Sunk cost concept
D. Total cost concept