Question

Indicate whether the following statements are true or false

-    Increasing the number of units in a batch increases batch-level costs       -    Eliminating a business segment often allows a company to avoid some facility-level costs       -    To analyze a special order decision, a manager should identify differential costs and revenues.       -    Reliability of the supplier is a critical issue in an outsourcing decision.       - Availability of idle capacity is often relevant to special order decisions       - When making decisions in business, information that cannot be quantified (expressed in numbers) generally is not relevant       - Alternative uses for facilities should be considered in making a special order decision       - The purchase price of a old machine is relevant to the decision of whether or not to replace an old machine

Answer 1

1	False - Batch level costs are those costs which are incurred once for each batch, regardless of the size of the batch
	such as setup costs.
2	True - Facility level cost are costs to support general business operation.
3	True - Differential costs and revenues are used to take decision regarding special orders.
4	True - If the outsourcing decision is for a product critical for general business operation, then reliability of supplier is
	critical.
5	True - Special orders are one time order made by a customer. To fulfil these orders you should have available idle
	capacity or you have to disturb the normal production, which will cost more.
6	False - Sometime for qualitative decisions in business, information that cannot be quantified is relevant.
7	True - For making decision regarding special order, differencial costs and revenues are compared for alternative uses
	for facilities
8	False.