- The choice of the absorption or contribution approach affects the manufacturing cost per unit because the manufacturing cost per unit is _____.
a. higher if the absorption approach is used
b. higher if the contribution approach is used
c. the same regardless of the approach
d. independent of the approach
- The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide an adequate profit margin is referred to as _____.
a. full costing
b. target costing
c. predatory pricing
d discriminatory pricing
- Jack Bowers has paid off the mortgage on his house and continues to live in the house. The interest income forgone by not selling the house and investing the proceeds is an example of a(n) _____.
a. sunk cost
b. detrimental cost
c. opportunity cost
d. outlay cost
- _____ would be a consideration in a make-or-buy decision.
a. Excess capacity
b. Variable factory overhead
c Rental income from unused facilities
d. All of these answers are correct
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