Question

QUESTION 7 A general rule in relevant cost analysis is variable costs are alwavs relevant fixed costs are always irrelevant differential future costs and revenues are always relevant depreciation is always relevant QUESTION 8 The basic objective of the residual income approach to performance measurement and evaluation is to have a division maximize its return on investment (ROI) O cash flows cash flows in excess of a desired minimum amount. net operating income in excess of a minimum return QUESTION 9 Product X-547 is one of the joint products in a joint manufacturing process. Management is studying whether to sell X-547 at the split-off point or to process X-547 further into Xylene. The following data have been gathered l. Selling price of X-547 11, Variable cost of processing X-547 into Xylene II. The avoidable fixed costs of processing X-547 into Xylene IV. The selling price of Xylene V. The joint cost of the process from which X-547 is produced Which of the above items are relevant in a decision of whether to sell the X-547 as is or process it further into Xylene? A) I, I, and IV B) , and IV C) 11,111, and V D) ,I, , and V A)

Answer 1

7	Correct answer is: differential future cost and revenues are always relevant
	While analyzing an offer, cost to be incurred and revenues generated are major components and always relevant.
8	Correct answer is: Net operating Income in excess of a minimum return
	As per Residual Income approach, Income over minimum return is to be considered as residual Income.
9	Correct answer is: B) I, II, III and IV
	The joint cost here is irrelevant cost, as it is already occurred.