Question

QUESTION 14 Operating performance measures like Manufacturing Cycle Efficiency (MCE) can help companies get products into the hands of customers more quickly and at a lower cost by identifying and reducing non-value-added activities True O False QUESTION 15 Sunk costs are considered to be avoidable costs. O True O False QUESTION 16 Excessive funds tied up in operating assets (like cash, accounts receivable, inventories, plant and equipment) can reduce turnover and therefore, improve Return on Investment. True O False QUESTION 17 A future cost that does not vary among alternatives under consideration is irrelevant True O False QUESTION 18 Fixed costs are sunk costs and are therefore irrelevant in decisions. True O False

Answer 1

14. True

Manufacturing Cycle Efficiency measure the time spent on non-value added activities. It can then be reduced and costs be avoided

15. FALSE
Sunk Costs are the costs which have already been incurred and cannot be changed. Hence, these costs are not avoidable.

16.FALSE
Return on Investment = Net Income/Average Investment in Assets

When excessive funds are tied up in assets, the ROI would reduce

17. TRUE

A future cost which is same under all alternatives and has to be incurred any way does not matter for decision making

18. TRUE
Fixed Costs are sunk costs such as depreciation and cannot be changed, hence irrelevant