Decision Making – Multiple Choice Questions (MCQs)

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1. Which of the following statement is false?


2. Which of the following is described as data that are pertinent to a decision?


3. One of Anil Company’s product has a contribution margin of $50,000 and fixed costs totaling $60,000. If the product is dropped. $40,000 of the fixed costs will continue unchanged. As a result of dropping the product, the company’s operating income should:


4. Company B produces 2,000 parts each year that are used in one of its products. The unit cost of producing this part is:

Variable cost: $7.50
Fixed costs: $6.00

The part can be purchased from an outside supplier at $10 per unit. If the part is purchased from the outside supplier, two-thirds of the fixed costs incurred in producing the part can be eliminated. The effect on operating income from purchasing the part would be a:


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