Question

1. A constraint is always a tangible thing affecting our business.

True / False

2. In deciding on whether to accept a special order, you want to consider both the additional revenues as well as the additional costs.

True / False

3. Avoidable fixed costs should be considered in a decision to make or buy a component.

True

False

4. The cost of equipment purchased last year should be included in the cost of an alternative when deciding to make or buy a component.

A

True

B

False

5. While making short-run decisions in a business, you should only consider quantitative factors.

A

True

B

False

Answer 1

Solution 1:

False, A constraint can be tangible or intangible thing affecting our business.

Solution 2:

True, In deciding on whether to accept a special order, you want to consider both the additional revenues as well as the additional costs.

Solution 3:

True, Avoidable fixed costs should be considered in a decision to make or buy a component.

Solution 4:

False, The cost of equipment purchased last year should not be included in the cost of an alternative when deciding to make or buy a component.

Solution 5:

False,While making short-run decisions in a business, you should consider quantitative and qualitative factors both.