[198200900]

PLEASE ON THIS QUESTIONS


3. For the relevant cost data in items (1) to (7), indicate which of the following is the best classification:
(a) sunk cost
(b) incremental cost
(c) variable cost
(d) fixed cost
(e) semi-variable cost
(f) semi-fixed cost
(g) controllable cost
(h) non-controllable cost
(I) opportunity cost

1) A company is considering selling an old machine. The machine has a book value of $15,000. In evaluating the decision to sell the machine, the $ 15,000 is a …..

2) As an alternative to the old machine, the company can rent a new one. It will cost $10,000 a year. Analysing the cost-volume behaviour the rental is…

3) To run the firm’s machines, there are 2 alternative courses of actions. One is to pay the operator a base salary plus a small amount per unit produced. This makes the total cost of the operator a…

4) As an alternative, the firm can pay the operator a flat salary. It would then use 1 machine when volume is low, 2 machines when it expands, and 3 during peak periods. This means that the total operator cost would now be a….

5) The machine mentioned in (1) could be sold for $11,000. If the firm considers retaining and using it, the $11,000 is a….

6) If the firm wishes to use the machine any longer, it must be repaired. For the decision to retain the machine, the repair cost is a …

7) The machine is charged to the foreman of each department at a rate of $13,000 a year. In evaluating the foreman, the charge is a …

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