Question

1. Relevant information refers to ________ that will differ among the alternative courses of action.
A) future costs only
B) future revenues only
C) future costs and revenues
D) past costs and revenues

2. Fixed selling expenses affect the calculation of ________ on the contribution income statement.
Fixed selling expenses do NOT affect the calculation of ________ on the absorption income statement.
A) contribution margin; gross margin
B) operating income; gross margin
C) gross margin; contribution margin
D) operating income; contribution margin

3. Variable selling expenses affect the calculation of ________ on the contribution income statement. Variable selling expenses do NOT affect the calculation of ________ on the absorption income statement.
A) gross margin; contribution margin
B) operating income; contribution margin
C) contribution margin; gross margin
D) gross margin; operating income

21. Department A covers one section of a large factory building. Which of the following costs is relevant to the decision to eliminate Department A?
A) Heating expenses of building allocated to Department A
B) General corporate overhead allocated to Department A
C) Salary Expense of Supervisor in Department A; he only works in Department A
D) Depreciation Expense on store building allocated to Department A

Answer 1

Answer:1)- Relevant information refers to future costs and revenues that will differ among the alternative courses of action.

2)- Fixed selling expenses affect the calculation of operating income on the contribution income

Fixed selling expenses do NOT affect the calculation of gross margin on the absorption income statement.

3)- Variable selling expenses affect the calculation of contribution margin on the contribution income statement.

Variable selling expenses do NOT affect the calculation of gross margin

on the absorption income statement.

4)- Department A covers one section of a large factory building, the following costs is relevant to the decision to eliminate Department A:- Salary Expense of Supervisor in Department A; he only works in Department A