1) The predicted future costs and revenues that will differ as a result of alternative courses of actions are referred to as relevant information.

2) The accountant’s role in decision making involves collecting the relevant information and ultimately making the final choice.

3) A decision model is any method for making a choice, sometimes requiring elaborate qualitative procedures.

4) The contribution margin approach helps managers in pricing decisions because the relationships among variable costs, fixed costs and selling price changes are easier to show and understand.

5) In analyzing costs to decide whether to accept a special order, total fixed costs should be investigated to see how much fixed manufacturing costs per unit will be changed by the special order.

6) A fixed cost element of an identical amount that is common among all alternatives is essentially irrelevant.

7) Unit costs are useful for predicting fixed costs, while total costs are useful for predicting variable costs.

8) Unavoidable costs will not continue if an ongoing operation is changed or deleted.

9) Limiting factors include labour-hours and machine-hours that limit production and hence sales in manufacturing firms.

10) Marginal cost is the additional cost resulting from producing and selling one additional unit.

11) If small price increases cause large volume declines, demand is inelastic.

12) Predatory pricing is the act of charging different prices to different customers for the same product or service.

13) In the short run, the minimum price to be quoted for a product should be equal to the costs that may be avoided by not landing the order.

14) In using the four popular markup formulas for pricing, the decision-maker will get four different target prices and will pick the best one for the product.

15) Under the absorption approach to pricing, the decision-maker has no direct knowledge of cost-volume-profit relationships.

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